The Complete Compliance Checklist for NGOs and Trusts in India
NGOs and trusts in India must handle registration, 12A/80G, FCRA, annual filings, POSH and staff labour law. Here is the complete compliance checklist.
Running an NGO or trust in India means complying with charity-specific law, such as FCRA and 12A/80G, on top of the same labour and workplace laws that apply to any employer. Missing either layer puts funding or legal standing at risk.
Key facts at a glance
- NGOs typically register as a Trust, a Society, or a Section 8 company, each under a different governing law.
- 12A registration exempts the NGO's own income from tax; 80G registration lets donors claim a deduction, and both need periodic renewal.
- FCRA registration with the Ministry of Home Affairs is mandatory before accepting any foreign contribution, with a designated bank account and annual returns.
- A POSH Internal Committee is mandatory once an NGO has 10 or more employees, same as any other employer.
- EPF applies at 20+ employees (Rs 15,000 wage ceiling); ESI applies at 10+ employees (Rs 21,000 wage ceiling).
- Many states and the central government now expect NGOs to keep details current on the NGO Darpan portal.
- Losing 12A or 80G registration due to missed filings can retroactively affect an NGO's tax-exempt status and donor trust.
Choosing and registering the legal structure
An NGO's compliance path starts with its legal form. A Trust is registered under the relevant state Trusts Act (or a general deed for private trusts), a Society under the Societies Registration Act, and a Section 8 company under the Companies Act with the Ministry of Corporate Affairs. Each structure has different governance requirements around trustees or board members, meeting frequency, and amendment procedures, so this choice affects every downstream compliance step.
12A and 80G: the two tax registrations every NGO needs
12A registration exempts the NGO's income (donations, grants, and eligible activity income) from income tax, provided the funds are applied to charitable purposes. 80G registration is separate and benefits donors, letting them claim a tax deduction on contributions, which is often the deciding factor for corporate CSR partners and individual donors choosing where to give. Both registrations are granted for a limited period and must be renewed with the Income Tax Department before expiry, since a lapse breaks the tax-exempt chain even if the underlying activities are unchanged.
FCRA: the gate for foreign funding
No NGO can legally accept a foreign contribution, including from overseas donors, foreign branches of Indian companies, or international foundations, without registering under the Foreign Contribution (Regulation) Act with the Ministry of Home Affairs. FCRA-registered NGOs must route all foreign funds through a single designated bank account and file detailed annual returns on utilisation. FCRA compliance is strictly enforced, and registration can be suspended or cancelled for procedural lapses, not just for misuse of funds, so this is one area where NGOs should not cut corners on paperwork.
Registration comparison
| Registration | Purpose | Authority |
|---|---|---|
| Trust/Society/Section 8 | Legal existence and governance | State registrar / MCA |
| 12A | Tax exemption on NGO's own income | Income Tax Department |
| 80G | Tax deduction for donors | Income Tax Department |
| FCRA | Permission to receive foreign contributions | Ministry of Home Affairs |
| NGO Darpan | Public registry and grant eligibility | NITI Aayog |
POSH and labour law apply the same way they do to any employer
A common misconception is that charitable status exempts NGOs from workplace law. It does not. Any NGO or trust with 10 or more employees must set up a POSH Internal Committee, and standard EPF (20+ employees) and ESI (10+ employees) obligations apply to paid staff exactly as they would at a private company. Field staff and project-based hires are often missed in headcount calculations, which is a frequent source of unintentional non-compliance.
Annual filings that keep registrations alive
Beyond the initial registrations, NGOs need to stay current on recurring filings: income tax returns, audit reports (such as Form 10B where applicable), FCRA annual returns for foreign-funded organisations, and periodic updates to the NGO Darpan portal that many government and CSR funders now check before releasing grants. Missing these filings is one of the most common reasons NGOs lose 12A, 80G or FCRA status, often discovered only when a grant application is rejected.
If you are not sure where your NGO or trust stands on registrations, POSH and staff compliance, ComplianceCheck's state-wise compliance assessment gives you a clear picture in a few minutes.
Sources
- Income Tax Department - incometax.gov.in
- Ministry of Home Affairs (FCRA) - fcraonline.nic.in
- Ministry of Corporate Affairs - mca.gov.in
- NITI Aayog NGO Darpan portal
- EPFO - epfindia.gov.in
- ESIC - esic.gov.in
This guide is general information, not legal advice. Requirements vary by state, sector and headcount - confirm specifics with a compliance professional or the relevant authority.
Frequently Asked Questions
- What is the first registration an NGO in India needs?
- An NGO must first register its legal form, either as a Trust under the state Trusts Act, a Society under the Societies Registration Act, or a Section 8 company under the Companies Act, before it can apply for tax exemptions or foreign funding approvals.
- What is 12A and 80G registration?
- 12A registration exempts the NGO's own income from income tax, while 80G registration lets donors claim a tax deduction on their donations; both are separate registrations with the Income Tax Department and need periodic renewal.
- Do NGOs need FCRA registration to accept foreign donations?
- Yes. Any NGO that wants to receive foreign contributions must register under the Foreign Contribution (Regulation) Act with the Ministry of Home Affairs, maintain a designated FCRA bank account, and file annual returns, or it cannot legally accept foreign funds at all.
- Does POSH apply to NGOs?
- Yes. Any NGO or trust with 10 or more employees must constitute a POSH Internal Committee, the same as a private company; this applies regardless of the organisation's charitable purpose.
- Do NGOs need to pay PF and ESI for their staff?
- Yes, if headcount crosses the applicable thresholds. EPF becomes mandatory at 20 or more employees and ESI at 10 or more employees, and NGOs are not exempt simply because they are non-profit.
- What annual filings does a registered trust or society need to make?
- Depending on structure and exemption status, NGOs typically need to file an income tax return, an audit report where applicable (such as Form 10B), and increasingly update details on the government's NGO Darpan portal; FCRA-registered NGOs also file a separate annual FCRA return.
- Can an NGO lose its 12A or 80G registration?
- Yes, if it fails to file required renewals or annual compliance on time, or if activities are found inconsistent with the stated charitable purpose, the Income Tax Department can cancel or refuse to renew 12A or 80G registration.
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