Comparative Table for for Forms for Registration for NGOs in India

8/7/2019 Comparative Table for for Forms for Registration for NGOs in India

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Comparative Statement for

Forms of Registration for NGOs

in India

S.Bheema Rao

Faculty-Microfinance


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Comparative Statement for Forms of

Registration for NGOs in India

Description Society Trust Company

1.Act under which

is Registered

The Society

Registration

Act,1860

The Registration

Act,1882

The Companies

Act,1956

2.Ease of

Formation Relatively simple.It may take 1-2

months

Very simple, It maytake a week Relativelycomplicated. It

may take 3-6

months

3.Authority with

whom to be

registered

Registrar of

Society of

concerned state

Sub registration of

Registration

Registrar of

Societies of the

concerned state4.Approval of

Name

Separate

application is not

required ,Name

generally granted if

available

Not required Separate

application is

required to be

made .There are

strict guidelines for

approval of name


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5.Minimum No.

of subscribers /

Trustee requires

7 ( Seven) 2 (Two) 2 (Two)

6.Cost of

registration

Less than

Rs.10000.00

Less than

Rs.10000.00

Less than

Rs.25000.00

7.Governing

Structure

Two tier structure

a. General Body

b. Executive

Committee

Single structure

the trustees are the

ultimate authority

Two tier structure

a. General Body

b. Board of

Directors

8. Voting Rights All members haveequal rights

All members haveequal rights

The voting rights mayvary on the basis of

share holdings. The

provision can be used

for control purposes


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9. Types of

activities allowed

No much of a

difference between

these 3 forms. Any

kind of charitable

and public utility

activity can be

under taken

Same Same

10. Annual

Documents to be

filled

The Act requires a

list of management

body to be filled

every year. But

different states

have different

requirements for

filling additional

documents

No documents are

required to be filled

Annual returns and

audited accounts

are required to be

held every year


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11. General and

Board meetings

General and Board

meetings are

required to be held

as prescribed in the

bye law of the

society

No provisions are

laid down.

Adequate rules

should be framed

in the trust deed, in

this regard.

Specific provisions

have been laid

down. At least 1

Annual General

Meeting and 4

Board meetings are

required to be held

every year.

12. Transfer of

Ownership

Membership not

transferable

Membership not

transferable

Membership can be

transferred

13.Payment to

functionaries

Permitted as the

general body may

decide

Provision in the

trust deed should

be there for any

such payment

Permitted as the

general body may

decide


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14. Recurring

expenditure

The statutory

compliances

required are

minimal.

No statutory

recurring

expenditure

Annual returns and

Balance Sheet are

filled along with

certain fees.

15. Area ofOperation

Can operatethroughout India

even if registered

in one particular

state. No separate

registration is not

required

Can operatethroughout India.

Can operatethroughout India as

the registration is

granted by the

Central

Government

16.Income Tax

Registration

Compulsory within

12 months of

registration

Compulsory within

12 months of

registration

Compulsory within

12 months of

registration


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Registration of Society

Memorandum of Association in duplicate alongwith a certified copy. It

should be neatly typed and pages serially numbered.

Rules and regulations/Bye-laws in duplicate duly signed.

Affidavit on non-judicial stamp paper of appropriate value sworn by thePresident or Secretary of the society stating the relationship between the

subscribers. The affidavit should be attested by an oath commissioner,

Notary Public or Magistrate 1st class.

Documentary proof such as House Tax receipt, rent receipt in respect of

premises shown as registered office of the society or no-objectioncertificate from the owner of the premises.

Covering letter along with the requite fees, requesting the Registrar for

registration


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Certificate of Registration

The registrar of Societies will verify and process

the above mentioned documents.

After satisfying himself about the complianceof the provisions of the relevant Act and the

correctness of the Registrar will issue a

certificate of registration


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Acceptance of Foreign Contributions

Acceptance of foreign contribution by MFIs registered under

the Societies Registration Act 1860 is regulated by the

Foreign Contribution (Regulation) Act 1976 (FCRA).

MFIs need to make applications in form FC-8 of FCRA tothe Secretary, Ministry of Home Affairs, New Delhi.

Once registered with the Ministry of Home Affairs, these

organizations have to agree to receive such foreign

contribution only through one of the branches of a bank as itmay specify in its application for registration.


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Taxation

Section 11 of the Income Tax Act, exempts the income of charitable

societies from the charge of tax on the fulfillment of certain conditions.

Sections 12, 12A, 12AA and 13 and certain clauses of section 10 of

IncomeT

ax Act also govern the issue of taxation of such organizations. Since the object of microfinance may be considered a charitable function,

local assessing officers of the Income Tax Department often exempt the

income from microfinance activities from income tax. However MFIs

need to apply to the income tax authorities to get this exemption. The

wealth of the societies however, is subjected to Wealth Tax at 1% of the

net value of the wealth with a basic exemption of Rs15 lakhs.


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NGO MFI ; Issues and Challenges

Operational Issue (Scale of outreach)

Geographical Coverage

Range of Products and Services offered ( specially Saving product)

Increase Number of Clients served

Professionalism in HR and other systems & polices

Financial Issues (Sustainability)

Equity capital

Commercial Capital

Grants / Funds through FCRA

Financial Self sufficiency

Institutional Issues ( Governance & legal) Governance ( Ownership & Board formation)

Mission Drift from Social to Business

Taxation and Transparency in Standard Reporting


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Conclusion

Now a days so many NGOs are transforming

from NGO-MFI to NBFC with the aim of

OUTREACH & SUSTAINABILITYBest example :

SKS Microfinance

Spandana MicrofinanceShare Microfinance


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Thank You