Running an NGO in India: registration, tax and compliance
What a small organisation has to do to exist in law, keep its income free of tax, let donors claim a deduction and stay eligible for CSR, foreign and government money, set out in one place with the dates that matter.
Why the rules sit in so many places
No single law governs a non-profit organisation in India. The organisation is created under one law, which may be a state trust Act, the Societies Registration Act, 1860 or a state societies law, or section 8 of the Companies Act, 2013. Its income is free of tax only if it is registered under a second law, the Income-tax Act. A third set of rules decides whether it can take money from particular sources. The CSR Rules govern money from companies, the Foreign Contribution (Regulation) Act, 2010 governs money from abroad, and central ministries give grants only to organisations registered on NITI Aayog's NGO Darpan portal. Each regulator sets its own forms and deadlines, and none of them checks the others for you.
The tax layer changed this year. The Income-tax Act, 2025 repealed the Income-tax Act, 1961, and the old Act continues to govern tax years that began before 1 April 2026 (section 536(2)(c)). Sections 12A, 12AB and 80G, the numbers every NGO accountant knows, are replaced by section 332 (registration of a "registered non-profit organisation") and section 354 (approval so that donors can claim a deduction). Section 03 below sets out how the new sections work and what changed.
The three legal forms
Section 332(1) of the Income-tax Act, 2025 lists the bodies that may apply for registration. Among them are a public trust, a society registered under the Societies Registration Act, 1860 or under any law in force in India, and a company registered under section 8 of the Companies Act, 2013. An unregistered group of volunteers is not on the list, so the first decision is which of the three to form.
There is no central law for public charitable trusts. Section 1 of the Indian Trusts Act, 1882 says that nothing in it affects public or private religious or charitable endowments. Some states have their own Act. Under section 18 of the Maharashtra Public Trusts Act, 1950, for example, the trustee of a public trust must apply for its registration to the Deputy or Assistant Charity Commissioner of the region, within three months of the trust's creation, with a copy of the trust deed and particulars of the trustees, the property and the mode of succession to the office of trustee. A trust has trustees and no members. The deed decides how trustees are appointed and replaced, so a badly drafted deed can leave a trust with no lawful way to renew its board.
Under section 1 of the Societies Registration Act, 1860, any seven or more persons associated for a literary, scientific or charitable purpose may form a society by subscribing their names to a memorandum of association and filing it with the Registrar. Section 2 says the memorandum must state the society's name, its objects and the names, addresses and occupations of its governing body, and a copy of its rules, certified by at least three members of the governing body, must be filed with it. Every year, within fourteen days after the annual general meeting (or in January if the rules provide for no such meeting), the society must file a list of its governing body with the Registrar (section 4). If the society is dissolved, its remaining property cannot be divided among its members and must go to another society (section 14). Section 332(1)(b) also recognises societies registered under any other law in force in India, so check which societies law applies in your state before you file.
Section 8 of the Companies Act, 2013 lets the Central Government license a company whose objects include commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment or a similar object, which intends to apply its profits to those objects and which prohibits the payment of any dividend to its members. It may drop "Limited" from its name. It cannot alter its memorandum or articles without the Central Government's previous approval (section 8(4)), the licence can be revoked for breach of its conditions or fraud (section 8(6)), and a default under the section is punishable with a fine of ₹10 lakh to ₹1 crore on the company and up to three years' imprisonment or a fine of ₹25,000 to ₹25 lakh, or both, on each officer in default (section 8(11)). A Section 8 company carries the ordinary annual filings of a company and is recognised in every state.
Income tax under the 2025 Act in six points
- Old registrations carry over. Section 536(2)(j) of the Income-tax Act, 2025 says that any approval given or recognition granted under the repealed Act is deemed to have been given under the corresponding provision of the new Act and continues in force, so far as it is not inconsistent with the new Act. The new Act's definition of "specified provision" in section 355 covers sections 12A, 12AA and 12AB and section 10(23C) of the 1961 Act alongside section 332. An organisation already registered under section 12AB and approved under section 80G does not apply again now. It renews when its present registration nears expiry. For the tax year that ended on 31 March 2026, the return and audit report are still filed under the 1961 Act, as section 536(2)(c) provides.
- Who can register under section 332. The applicant must be constituted, registered or incorporated in India for one or more charitable purposes, or public religious purposes, and its property must be held for the benefit of the general public under an irrevocable trust wholly for charitable or religious purposes in India (section 332(2)). Older bodies created before the 1961 Act came into force may hold property partly for those purposes. The application goes to the Principal Commissioner or Commissioner of Income-tax.
- Provisional first, then regular. A new organisation whose activities have not started applies at any time during the tax year from which it wants registration, and the Commissioner must grant provisional registration within one month from the end of the month of application. It is valid for three tax years (section 332(3), Table serial 1, and section 332(8)). Once activities start, the organisation must apply for regular registration within six months (serial 3). If the provisional period is running out and activities have still not started, it applies at least six months before expiry (serial 4). Under the Income-tax Rules, 2026 the provisional application is Form 104 (formerly Form 10A) and the regular application is Form 105 (formerly Form 10AB).
- Regular registration lasts five years, or ten for smaller organisations. A regular registration is valid for five tax years and is renewed by an application made at least six months before it expires (serial 5). Section 332(5) gives ten years in place of five for applications under serials 3 to 7 where the applicant's total income, computed without the exemption, did not exceed ₹5 crore in each of the two tax years before the application. An organisation that changes its objects in a way that no longer fits the conditions of registration must apply again within thirty days of the change (serial 7). The Commissioner may condone a late application for reasonable cause (section 332(4)). If a renewal or other application under serials 3, 4, 5 or 7 is late and the delay is not condoned, the organisation becomes liable to tax on its accreted income under section 352 (section 332(6)).
- Donor deductions need a separate approval under section 354. Registration exempts the organisation's own income. A donor can claim a deduction only if the organisation is also approved under section 354, which uses the same timetable of provisional, regular and renewal applications. The conditions in section 354(1) are that the organisation is not expressed to be for the benefit of any particular religious community or caste, spends no more than 5% of its total income in a tax year on religious purposes, has no rule allowing its assets to be transferred for a non-charitable purpose, keeps regular accounts, files a statement of donations and gives each donor a certificate. A donor can then deduct 50% of the donation under section 133(1)(b)(ii), within the limits that section sets, and a donation above ₹2,000 qualifies only if it is not paid in cash (section 133(5)).
- Some income is taxed even after registration. Section 337 lists "specified income" that a registered organisation pays tax on. Anonymous donations are taxed above ₹1 lakh or 5% of total donations in the year, whichever is higher, with different treatment for organisations run wholly for religious purposes and some mixed ones. Any part of income applied, directly or indirectly, for the benefit of a related person is taxed, and so is income applied to purposes other than the charitable or religious purposes for which the organisation is registered. Investments made in breach of section 350 are taxed, as is accumulated income that is not used for the purpose, or within the period, for which it was set aside.
Audit, returns and donor statements
Under section 348, a registered non-profit organisation whose total income, computed before the exemption, exceeds the amount not chargeable to tax must have its accounts audited by an accountant and file the audit report in the prescribed form. That form is Form 112 under the Income-tax Rules, 2026, which replaces Forms 10B and 10BB. The Income Tax Department's FAQ on Form 112 says it must be filed one month before the due date of the return of income, and that an organisation can claim its exemptions in the return only after it has filed the report within that date. The same FAQ defines a small registered organisation, which fills in fewer schedules, as one whose regular income in the tax year does not exceed ₹5 crore, which has received no more than ₹10 lakh of foreign contribution and which has applied no more than ₹10 lakh of income outside India.
The table in section 263 of the 2025 Act fixes 31 October as the due date of the return for a person, other than a company, whose accounts must be audited under the Act or any other law. Every organisation approved under section 354 also files a statement of the donations it received (Form 113, formerly Form 10BD) and gives each donor a certificate (Form 114, formerly Form 10BE). The Income Tax Department's e-filing page says the last date for the donor certificate is 31 May following the end of the tax year, under rule 190(8).
For the tax year that ended on 31 March 2026, which still falls under the 1961 Act, CBDT Circular No. 07/2026 of 28 September 2026 extended the due date of returns, for the persons at serial 2 of the table below Explanation 2 to section 139(1) of the 1961 Act, from 31 October 2026 to 21 November 2026, and of audit reports for those persons from 30 September 2026 to 21 October 2026. Check with your accountant whether your organisation is one of those persons before relying on the later dates.
Three more registrations funders ask for
The Companies (Corporate Social Responsibility Policy) Rules, as amended with effect from 22 January 2021, require every entity that intends to undertake any CSR activity to register itself with the Central Government by filing Form CSR-1 on the MCA portal, which gives the agency its CSR registration number. A company can spend CSR money only through a qualifying implementing agency, and the Rules set conditions of legal form, income-tax registration and track record. Our CSR law guide sets these out, including the three-year track record and what a company's diligence team will ask to see.
An organisation needs a certificate of registration or prior permission from the Ministry of Home Affairs before it accepts foreign contribution (section 12 of the Foreign Contribution (Regulation) Act, 2010). A certificate is valid for five years (section 12(6)) and must be renewed within the six months before it expires (section 16(1)). Foreign contribution may be received only in the "FCRA Account" at the notified branch of the State Bank of India in New Delhi (section 17(1)), may not be transferred to any other person (section 7), and may be spent on administrative expenses only up to 20% of the contribution received in the year (section 8(1)(b)). The annual return in Form FC-4 is due within nine months of the close of the financial year (rule 17(1) of the FCRA Rules, 2011). Read our FCRA guide before you apply.
The Voluntary Action Cell of NITI Aayog maintains the NPO Darpan portal, where a non-profit organisation registers to obtain a unique identity number called the Darpan ID. NITI Aayog says the ID is mandatory for every organisation seeking grants from Ministries or Departments of the Government of India, and that it is also required for registration or renewal under the FCRA and for "seeking exemptions under 80-G of Income Tax". It adds that, under the Prevention of Money Laundering (Maintenance of Records) Amendment Rules, 2023, financial institutions must ensure an NGO Darpan unique ID before opening and operating an account. Apply for the ID as soon as the organisation is registered, because a bank account and most grants depend on it.
Board governance and conflicts of interest
The board of a small organisation is usually its founders, their friends and sometimes their relatives. The law does not forbid that, but the tax law reaches money that flows from the organisation to those people. Section 337 of the Income-tax Act, 2025 makes any part of a registered organisation's income applied, directly or indirectly, for the benefit of a related person taxable as specified income, computed in the manner the Rules prescribe. Section 355(h) defines a related person to include the author or founder and any trustee or manager, by whatever name called. It also covers anyone who contributed more than ₹1 lakh in the tax year or more than ₹10 lakh in total, a relative of a founder, trustee or manager, and any concern in which any of them has a substantial interest. The definition of relative is wide. It reaches spouses, brothers and sisters, the spouse's brothers and sisters, ancestors and descendants on both sides, and the descendants of brothers and sisters on both sides.
A Section 8 company is also bound by section 184 of the Companies Act, 2013. Every director must disclose his or her interest in other companies, firms and associations at the first board meeting in which he or she participates, at the first board meeting of every financial year, and whenever the disclosure changes. A director interested in a contract or arrangement under discussion must disclose that interest and must not take part in the meeting at which it is discussed (section 184(2)). A trust or society should write an equivalent rule into its deed, its rules or a board policy.
A workable conflict-of-interest policy for a small organisation does four things. It asks every board member to declare in writing, each year, their relatives on the staff, the businesses they or their relatives own, and any payment they receive from the organisation. It requires a member with an interest to leave the room when the matter is decided. It records the decision and the reason in the minutes. And it fixes pay for any related person by reference to what an unrelated person would be paid for the same work, with the comparison kept on file. None of this stops a founder's relative from working for the organisation, but it gives the auditor and the Assessing Officer a record to read.
Annual compliance calendar
A financial year that ends on 31 March, for an organisation registered under section 332, approved under section 354 and, where it applies, registered under the FCRA. Tick each item off as it is done. Your progress is kept in this browser.
Grey areas practitioners argue about
No form is best for every organisation. A trust needs only a deed and trustees and has no members, but its deed can be hard to amend and trust law differs by state. A society is a membership body whose general body can hold the governing body to account, at the cost of annual meetings and filings with the state registrar. A Section 8 company needs a licence and must file with the Registrar of Companies every year, with heavy penalties for default under section 8(11), but its governance rules are the same across India. All three can register under section 332. Decide first who should appoint and remove the board, because each form answers that differently and the answer is hard to change later.
Section 536(2)(j) keeps approvals and recognitions granted under the 1961 Act in force "so far as it is not inconsistent with the corresponding provisions" of the 2025 Act. The saving does not say whether the ten-year validity in section 332(5) can apply to a registration first granted for five years under the old Act, since that benefit is written for applications made under the new table. Unless the CBDT has clarified the point by the time you read this, work from the expiry date printed on your existing order and apply to renew at least six months before it.
Section 337 taxes income applied for the benefit of a related person, and leaves the computation to the Rules. The Act does not say that a reasonable salary for work done is outside the charge. Many organisations employ a founder or a trustee's relative for real work. Keep the appointment letter, the job description, the board decision taken without the interested member, and evidence that the pay matches the market, because the question an Assessing Officer will ask is whether the payment was for the work or for the relationship.
Section 354(1)(a) denies approval for donor deductions to an organisation that is "expressed to be for the benefit of any particular religious community or caste". An organisation set up to work with Dalit, Adivasi or minority communities should read this clause against the exact wording of its deed or memorandum, and take advice on that wording before its next application under section 354.
Frequently asked questions
We are a group of volunteers with no registration. What do we lose?
An unregistered group is not among the bodies section 332(1) allows to apply, so its income is taxed in the ordinary way and donors cannot claim any deduction. It is not a trust, society or Section 8 company, so it cannot act as a CSR implementing agency. The group can keep working, but it cannot do any of these things until it takes one of the three forms.
We received 12AB registration and 80G approval in 2023. Must we apply again under the new Act?
Not now. Section 536(2)(j) continues approvals and recognitions granted under the 1961 Act, and section 355 counts a section 12AB registration as a "specified provision". Apply for renewal under section 332(3), serial 5, and section 354(2), serial 5, at least six months before the expiry date on your current orders, using Form 105.
What does provisional registration give a new organisation?
Provisional registration under section 332 and provisional approval under section 354 are granted without an inquiry into activities, within one month from the end of the month in which you apply, and last three tax years. They let a new organisation receive tax-exempt income and give donors a deductible receipt from the start. The obligation that comes with them is to apply for regular registration within six months of starting activities. If the application is late and the Commissioner does not condone the delay, the organisation becomes liable to tax on its accreted income (section 332(6)).
Our income is small. Do we need an audit for income tax?
Section 348 requires an audit and the audit report only where total income, computed before giving effect to the exemption, exceeds the maximum amount not chargeable to income-tax. Check separately whether your state trust or society law, the Companies Act or your funders require audited accounts whatever the income.
Can a donor who pays in cash claim the deduction?
Only for donations of up to ₹2,000. Section 133(5) allows a deduction for a donation above ₹2,000 only if it is paid by a mode other than cash, and section 133(4) allows the deduction only for donations made as a sum of money, so gifts in kind do not qualify.
Sources
- Income-tax Act, 2025, section 332, section 337, section 348, section 354, section 355, section 133, section 263 and section 536, Income Tax Department.
- Income Tax Department, Navigator: Income-tax Forms 2026 against the 1962 Rules; Form 112 FAQs; Form 104 FAQs; Form 113 and Form 114; news on CBDT Circular No. 07/2026.
- Societies Registration Act, 1860, text published by the Charity Commissioner, Maharashtra, and on Indian Kanoon.
- Indian Trusts Act, 1882, section 1; Maharashtra Public Trusts Act, 1950, section 18.
- Companies Act, 2013, section 8, section 92, section 96, section 137 and section 184.
- Foreign Contribution (Regulation) Act, 2010, section 7, section 8, section 12, section 16 and section 17; Foreign Contribution (Regulation) Rules, 2011, rule 17.
- Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, text of the 22 January 2021 amendment as reproduced by TaxGuru.
- NITI Aayog, Voluntary Action Cell and the NPO Darpan portal.
ImpactMojo (2026). "Running an NGO in India: registration, tax and compliance." ImpactMojo Law Guides. Retrieved from https://impactmojo.in/law-guides/ngo-governance-compliance.html
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