How to start an NGO in India: Section 8 company, trust or society registration

Section 8 company, trust or society: which to choose?

A Section 8 company is registered with MCA under the Companies Act, needs no minimum capital, and must apply profits to its objects. It has the most credibility with corporate and foreign donors, but carries company law compliance. A trust is created by a trust deed, usually registered with the sub-registrar or under a state public trusts law, and is simple to set up with as few as two trustees.

A society is registered under the Societies Registration Act 1860 or a state law and suits membership-based organisations with elected governance. Trusts are harder to amend; societies and Section 8 companies offer clearer governance and succession.

Registrations an NGO needs

Formation is only the first step. Tax registrations and funding-specific registrations decide whether donors will support you, whether they get deductions and whether your income stays tax-free.

Income-tax registration under the 2025 Act

The Income-tax Act 2025 consolidates charitable provisions; old sections 12A, 12AA and 12AB map to section 332, and 80G to section 354. New organisations apply in Form 10A for provisional registration valid for three years, then for regular registration in Form 10AB before it expires or within the time the law allows after starting activities.

Regular registration is valid for five years, or 10 years for organisations whose total income did not exceed ₹5 crore in each of the two preceding tax years. Donor deduction approval under section 354 remains five years. Missing renewal deadlines can expose accumulated funds to tax, so track them closely.

Foreign contributions and CSR

FCRA registration generally requires that the organisation has existed for at least three years and spent at least ₹15 lakh on its objects over the last three years, excluding administrative expenses. Newer organisations can seek prior permission for a specific amount from a specific donor for a specific purpose. All foreign contributions must first be received in the FCRA account at the State Bank of India's New Delhi Main Branch.

To receive CSR funds from companies, register with MCA in Form CSR-1. Eligibility depends on the entity type and tax registrations; the regulations require relevant income-tax registrations, so obtain those first.

Ongoing compliance

File the annual income-tax return in ITR-7 with the audit report, apply income as the law requires and report donations received through Forms 10BD and 10BE so donors can claim deductions. FCRA-registered organisations file annual returns and must use foreign funds only for permitted purposes.

Section 8 companies also file annual financial statements and returns with MCA and hold board meetings. Trusts and societies follow state law filings. GST generally does not apply to charitable activities, but some income such as sponsorships or sale of goods may be taxable.

Pitfalls for new NGOs

Draft the objects clause carefully at formation. Broad, clear charitable objects make tax registration and future funding easier, while vague or commercial objects invite rejection.

• Collecting donations before income-tax registration and donor approval are in place.
• Accepting foreign money without FCRA registration or prior permission.
• Missing the Form 10AB deadline when provisional registration ends.
• Spending on activities outside the registered objects.

Step by step

1. 1Choose the legal form

   Section 8 company, trust or society based on governance and donor needs.

2. 2Draft constitutional documents

   Objects, governance, trustees or members, and dissolution clauses.

3. 3Register the entity

   With MCA, the sub-registrar or the registrar of societies.

4. 4Apply under section 332

   File Form 10A for provisional income-tax registration.

5. 5Apply under section 354

   Seek donor deduction approval.

6. 6Register for funding channels

   NGO Darpan, CSR-1 and, when eligible, FCRA.

7. 7Set up compliance

   Accounts, audit, ITR-7 and donation reporting.