Difference Between NGO and NPO, three forms of NGO/NPO in India, Procedures for establishing NGO / NPO in India, Ebizfiling

A complete guide on NGO/NPO, & Difference Between NGO and NPO 

How to Register an NGO / NPO or Charitable Societies in India, Difference Between NGO and NPO 

NGO (Non-Government Organization) or NPO (Non- Profit Organization) is an organization formed under Section 8 of the Companies Act, 2013 to achieve a specific set of objectives as defined under the Act. These types of companies are formed with the objective of working towards the public development of society at large. This blog will help you in understanding the Difference Between NGO and NPO, The three forms of NGOs/NPOs in India, objectives, and Procedures for establishing NGO / NPO in India.

There are three forms of NGOs/ NPOs in India

  1. Society
  2. Trust
  3. Section 8 Company

Objective of registering an NGO/NPO/ Charitable Society in India

The basic objective of forming NGO or NPO/ Charitable Societies in India under Section 8 of the Companies Act, 2013 are as follows:

  1. Development for the upliftment of the society: All the assets and income earned by the NGO during the year should be for charitable purposes for the upliftment of any particular religion, caste, creed, or community.

  2. Management or Protection of Assets: The primary objective of forming a trust is to manage the assets and to protect the assets from creditors, marriage breakdown or from those who might influence your beneficiaries who is himself not capable of doing so on his own.

  3. For the promotion of activities governed under Section 8 of the Companies Act, 2013: Section 8 of the Companies Act, 2013 are formed with an objective to utilize its profits in the promotion of sports, commerce, religion, art, social welfare, science, education, charity, protection of the natural environment or any such other as notified by the central government from time to time.

Difference Between NGO and NPO 

      BASIS

NON PROFIT ORGANISATION (NGO)

NON-GOVERNMENT ORGANISATION (NPO)

Definition

An NGO refers to a non-a governmental organization that has been formed by the individual residents but operated by the government for the benefit of the society.

NPO is a non-profit organization established to provide goods or services to people for the promotion of objectives given under the Companies Act, 2013.

Governing Laws

An NGO can be registered as per  the nature of the organization, i.e. as a Trust under Public Trust Act, or as a Society as a Societies Registration Act, 1860

An NPO which is incorporated as a company is governed under section 8 of the Companies Act, 2013.

Objective

An NGO works for the betterment, upliftment, and development of society to create awareness among human rights, women empowerment, etc.

NPO is set up to promote art, science, research, commerce, or any other useful  purpose as given under section 8 of the Companies Act, 2013

Examples

CRY (Child Rights and You), Care India Foundation, Childline India Foundation, etc.

Tata Educational and Development Trust, Reliance Foundation, Azim Premji Foundation, etc.

Procedure for establishing NGO / NPO in India

There are three possible methods to establish NGOs/ NPOs in India

  • Society Registration

The Charitable Societies in India are registered under the Indian Societies Act, 1860. The procedure to form Societies is as follows:

 

Step 1: Reservation of name: When selecting a name for society registration, it is vital to understand that, the name for the society should always be identical and unique.  Moreover, the proposed name shall not suggest any patronage of the State Government or the Government of India or fascinate the provisions of the Emblem & Names Act, 1950.

 

Step 2: Drafting of Memorandum of Association and Society’s By-Laws: The next is to draft a Memorandum of Association of the society along with the by-laws of the society. The memorandum must contain the name of the society, its object and names, address, designations, and occupations of each of the establishing members of the society. The draft should be signed by every establishing member, witness by Gazette Officer, Oath Commissioner, Notary Public, Magistrate first-class, Chartered Accountant, or Advocate along with their official stamping and complete address.

 

Step 3: Submission of required documents to the registrar of societies: The applicant has to submit the below document to the registrar of the societies of the concerned state in 2 copies:-

  • List of all the members of the governing body along with their signatures.
  • Memorandum of association and  By-Laws of the society
  • Covering letter mentioning the objective or the purpose of the society which will be annexed to the beginning of the application.
  • Proof of Address of the registered office of the society.
  • Declaration by the president of the proposed society that he is willing and competent to hold the said post.

 

Step 4: On receiving the application, the registrar will sign and return the first copy to the applicant as an acknowledgment to the application and keep the second copy for approval. After proper verification of the documents, the registrar will issue an  Incorporation Certificate by allotting a  unique registration number to it.

  • Trust Registration

The procedure for Trust Registrations are given below:

 

Step 1: Select a Name for the Trust: The first and foremost step in the process of forming a Trust registration is the name selection for the proposed Trust. The name should fit the provisions of the Emblems and Names Act, 1950 and it should not violate the provisions of the Trademark Act.

 

Step 2: Drafting of Trust Deed: The next step is drafting of the Trust Deed of the trust which contains the name, object, terms, and conditions, management of the assets, powers of the Donor, Trustee, and Beneficiary in the trust, and method of winding up of the trust.

 

Step 3: Submission of documents to the commissioner: The following documents must be submitted to the office of Commissioner for registration of Trust:

  • Covering letter for Trust Registration to the Official having Jurisdiction
  • Duly Notarized of Application Form as given in Schedule II
  • Duly affixed stamp attached to the application form
  • Certified copy of Trust deed
  • Consent letter of Trustees

 

Step 4: On receiving the application, the commission after proper verification of the documents, the commissioner will issue the Trust, trust registration number, and a copy of the entry into the registry.

  • Section 8 Company Registration

For registering Section 8 Company, the following procedures needs to be followed

 

Step 1: Obtain a DSC and DIN of the proposed Directors of the Company. Obtain DSC and DIN of at least one director to sign the E-forms related to incorporation. File Form DIR-3 with the ROC for getting a DIN.

 

Step 2: Draft the MOA and AOA of the company once, the DIN or DSC has been received by the director, File E- MOA and E- AOA as per the table applicable to the shareholding of the company.

 

Step 3: File SPICe+ with the ROC for incorporation along with the required documents

 

Step 4: File Form INC-12 with the Central Government for the application of Section 8 Company. Once the Form is approved, a license under section 8 will be issued in Form INC-16. The Registrar shall have the power to include any conditions in the license as may thinks fit.

Conclusion

An NGO/ NPO is an association of person that intends to use its profit in the promotion of art,  science, education, or any other social or cultural purpose for humanitarian or cooperative objective instead of a commercial one. Forming a charitable organization in India is an uncomplicated process if the work is given as per the above rules. The article gives an idea about different types of NPO registration in India and the various advantages of cultivating for the same. Therefore, the procedure for establishment and the requirement of documents vary based on the different types of NPOs you want to incorporate.

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