LEGAL COMPLIANCE

It is essential for Non Government Organisations (NGOs) to be transparent and accountable while dealing with funds received from the government and donor agencies. Here is a checklist of various legal formalities that NGOs (especially those based in India) should follow to achieve total transparency and accountability. 

Registrar of Societies

• Proper registration as a legal entity
• Filing of returns with the Registrar of Societies or the respective authority on an annual basis as required along with the minutes of the General body / Annual Report/Annual audited statements
• Amendments made, if any, in the bye-laws or the constitution should be properly documented and filed with the Registrar of Societies or the respective authority

Income Tax Act

• Registration under section 12A and 80G
• Obtaining Permanent account number (PAN) from the Income Tax department
• Filing of annual returns on income
• Calculation of funds to be accumulated, if any, should be resolved in the Board of Trustees or Executive Committee meetings and filed with the Income Tax authorities
• Tax Deduction at Source (TDS) to be filed as required by the Income Tax Act

FCRA - Foreign Contribution Regulation Act

• Registration under FCRA
• Filing of returns
• Changes in the Governing Council / Board of Trustees should be informed to FCRA after obtaining proper consent from the Ministry of Home Affairs
• Maintenance of a separate bank account exclusively for foreign contributions

Donor/Resource Agencies

• Filing of both financial and activity reports
• Following the donor prescribed formats
• Adhering to the contract conditions set by different donors

Other legal compliances

• Following rules and regulations with regard to pension fund, gratuity, and professional tax

Audits

• Guidelines issued by the Institute of Chartered Accountants of India should be followed for audits
• Regular audits to be conducted
• Audit reports to be acted upon

Contributed by
Venugopal P. K
Administration Officer
LCD-SARO