NGO Compliance and Annual Filing — Legal Obligations for NGOs in India

NGOs registered under Section 12A of the Income Tax Act are exempt from paying income tax on their income. To maintain the exemption, the NGO must file its income tax return annually by September 30 (if audit is required).

The NGO must at least 85% of its income to charitable purposes in India. If the income is not applied in the same year, it can be accumulated for up to 5 years for specified purposes. Non-compliance can result in loss of tax exemption.

12A registration must be maintained by filing annual returns and ensuring that the NGO's activities remain charitable. The NGO must not engage in any activity that violates the objects or engages in prohibited activities.

80G registration (allowing donors to claim tax deductions) must be renewed as prescribed (lifetime basis after the amendment). The NGO must maintain proper records of donations and issue 80G receipts to donors. The receipts must contain the PAN of the NGO, 80G registration number, and donor details.

All NGOs must get their accounts audited annually by a Chartered Accountant. The audit report must be in Form 10B (for NGOs claiming 12A exemption). The audit must be completed before the due date of filing the income tax return.

The auditor examines the NGO's financial statements, income application (whether 85% was applied), compliance with 12A/80G conditions, and maintenance of proper books of accounts. The audit report is filed along with the income tax return.

Trusts: Generally not required to file annual returns with the Sub-Registrar unless specified in the trust deed. However, the trust must maintain proper records.

Societies: Must file annual returns with the Registrar of Societies. The annual return includes a list of governing body members, audited accounts, and a report of activities. The due date varies by state.

Section 8 Companies: Must file AOC-4 (financial statements) and MGT-7 (annual return) with the ROC within prescribed timelines. They must hold Annual General Meetings and maintain statutory registers.

NGOs with FCRA registration must file the FC-4 annual return within 60 days of the financial year end (by May 29). The return includes details of foreign contributions received, utilized, and balance. It must be audited by a Chartered Accountant.

The NGO must maintain a separate FCRA account and use the foreign contribution only through that account. Administrative expenses from foreign contributions are capped at 20%. Changes in the governing body must be reported to the MHA.

Non-compliance with NGO regulations can result in serious consequences — loss of 12A/80G exemption, cancellation of FCRA registration, penalties under the Income Tax Act, and in severe cases, prosecution. Timely compliance is essential for the NGO's continued operation and credibility.