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Compliance
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A Brief Definition OF NGO and Its Compliances: The NGO (Non-Government Organization) in India is considered an entity that works for the society without having a profit-earning objective; that is why it is also called a Non-Profit organization. These entities work for the development, positive changes, social services. They lessen the gaps in areas where the government is unable to perform effectively.The core aim of the NGO is to work selflessly to serve the needy people in any way and don’t have any commercial motive in return for that. But in India, an NGO must work with legal compliance and Indian laws; that is why NGO registration is required.In India, one can register NGO as a legal body in three types:
- Society
- Trust
- Section 8 Company
List of NGO compliances that are necessary: No NGO can operate without any legal compliance. If you have registered your NGO in any of the forms, including Society, Trust, and Section 8 Company, it is mandatory to follow legal compliances related to it. If you feel that an NGO is completely free from Tax concession because of a non-profit body, it is the biggest misconception. Below-described imperative compliances are compulsory for NGOs to confirm that it is operating genuinely as per NGOs laws.
Permanent Account Number(PAN): The first thing to perform after NGO registration with the relevant government authority is to apply for a PAN. It is compulsory for an NGO to apply for the PAN after registration.
80G Registration as per Income Tax Act 1961An NGO that wants a tax rebate should apply for 80G registration under Income Tax Act. However, an NGO doesn’t need to get an 80G certificate, but it makes NGO eligible for raising funds, grants, and donations. According to the new amendment, the tax exclusion clause to the NGOs is now subject to change, which means that the government may have the right to impose a tax on NGO’s income in some functions and events. The government will subsequently calculate the firm’s changeable and unchangeable assets as per market price and taxable. The amendment aims to detect if there is any exploitation of the tax exclusion of the charity. Also, the people donating and granting to NGOs will come under investigation; there is a possibility that no exclusion may be given for charity in the future.
FCRA Registration. NGOs that want to accept foreign donations, funding, and grants must register themselves with the FCRA department under the Ministry of Home Affairs. NGO cannot take any foreign funding and donations without FCRA registration. Suppose they receive funding illegally in the absence of FCRA registration. In that case, the government may impose a heavy penalty on that respective NGO or get terminated by the government. Every NGO must inform the government about foreign donations and funding to avoid legal action and irregularity. Make sure you are acquiring money from foreign to work for a suitable purpose. In case the government detects that an NGO misuses the funds to tarnish India’s unity, sovereignty, and constituent. In that case, the government can terminate the license and blacklist the NGO and also charge you for money laundering.
12A Registration of the Income Tax Act: An NGO registered under section 12A of the Income Tax Act is essential to avail tax advantage. Though a 12A certificate is not compulsory registration. The core reason to apply for 12A registration is to benefit from tax rebates and exclusions. According to the latest amendment in the Finance Act 2021-21, the already registered NGOs with section 12A must apply again for the validity to get the tax exclusions. Also, the lifetime validity earlier has been changed to 5 years.
Tax Deduction and Collection Account Number(TAN): At the time of NGO operating, if NGOs are responsible for deducting the tax from the source, it is vital to apply for TAN.
Shops and Establishments Act: As per NGO laws in India, if an NGO appoints any person or group of people in their office to bring any work for NGO. Then, the respective NGO must apply for a Shops and Establishment License.
Custom Duty. A Non-profit organization is active in any relief and social work even then there is an exclusion of stamp duty. The exclusion is 100 importing goods such as edible items, blankets, clothes, medicines, etc. The other exclusion is for research devices and machinery proposed for research institutions. GST Registration. If the NGO offers services including research work, service provider, or consultants, and if their gross income from such work surpasses the standard exclusion GST limit. Then the NGO must apply for GST registration.
Retirement Perks And Advantages. If an NGO has surpassed its size of members and staff limit more than the standard limit. In that case, they are liable to provide retirement advantages to their employees such as ESIC, provident fund, Gratuity, etc.
Professional Tax. NGO deduct tax from employees’ salaries and pay it to the government; that liability is called Professional Tax. It is the subject of state government, and hence every Indian state has separate regulations and laws for professional tax.
How CSFiling Is Helpful For You to Know About NGO Compliance CSFiling Online Pvt Ltd is a responsible company and NGO registration, solution provider. Our professional team has profound experience in our field. We listen to different business queries every day that makes us understand the multiple needs of our customers. We work based on the client’s needs and provide them solutions accordingly. Our prices are standard, and it doesn’t surpass to cut out your pocket absurdly because we are here to ask for genuine fees. You can trust us because we have a positive work environment and successful client satisfaction records.
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