Can NRIs Register an NGO in India?

Under Section 8 of the Companies Act 2013, NRIs and foreign citizens can register an NGO in India. When appointing directors, NRIs must include at least one Indian citizen to comply with the Foreign Contribution Regulation Act (FCRA) requirements for obtaining tax exemptions under sections 80G and 12A and to facilitate foreign funding. 

In this blog, we will explore how NRIs can register an NGO in India, covering the legal framework for NRIs, a step-by-step approach to NGO registration, an NGO registration checklist, and more. 

Can NRIs and Foreign Nationals Register An NGO In India?

NRIs who wish to contribute to India's social causes must register an NGO in India. The process for NGO registration involves obtaining approval from the Ministry of Corporate Affairs (MCA), completing documentation, adhering to CSR (corporate social responsibility), and tax compliance rules. 

Understanding the process and the legal framework can make your NGO registration process reliable and seamless. 

Understanding the Legal Framework For NRIs Registering An NGO In India. 

An NGO seeking formal recognition as a non-profit organization in India must follow the route of Section 8 Company Registration. This structure permits them to operate in India without prior distribution, build credibility, and enjoy tax benefits. 

Key Law Authorities Involved Here Are: 

• Companies Act 2013 (Section 8): Governing the registration of the non-profit company. 
• Foreign Contribution Regulation Act (FCRA), 2010: Governs and controls the acceptance and usage of foreign funds. 
• Income Tax Act, 1961 (Section 12A & Section 80G): Offers tax exemptions to NGOs and their donors. 
• Ministry of Corporate Affairs (MCA): The main authority that approves NGO registrations. 
• Registrar of Companies (ROC): The authority issues the certificate of Incorporation. 
• CSR Rules (Companies Act, 2013): CSR rules govern companies, while NGOs must comply with CSR-1 requirements if they wish to receive CSR funding.

Step-by-Step Process To Register NGO In India As NRI

The following is a step-by-step guide to registering an NGO in India as an NRI or foreign national. It is advisable for NRIs to seek assistance from a CA when registering an NGO in India, as they ensure 100% compliance and accuracy throughout the process. 

Step 1: Choose The Right NGO Structure

For an NRI seeking to register an NGO in India, a Section 8 company is ideal, as it is recognized nationally and provides better legal clarity than societies and trusts, which can vary from state to state. 

Step 2: Meet Director & Eligibility Criteria

As an NRI, you will be required to have at least one resident director is required as per MCA guidelines. Next up, as per the Ministry of Corporate Affairs, provide the valid ID proof, address proof, and additional KYC documents. 

Step 3: Get The NGO Name Approved

To apply for NGO name approval, use the MCA portal. Ensure that the name reflects the organization's charitable objectives and does not resemble any other existing entity. 

Step 4: Draft NGOs' MOA and AOA. 

Next, you will be required to draft the Memorandum of Association (MOA) and Articles of Association (AOA) stating your organization's non-profit goals. Having an MOA and an AOA is mandatory for the MCA review. 

Step 5: Apply to MCA for SPICE Part B and other forms for Section 8 company registration. 

Submit the SPICe+ (Part A & Part B) forms along with AGILE-PRO-S and INC-13 for Section 8 company registration.

Step 6: Register With The Registrar Of Companies (RoC)

Once you receive the COI along with Section 8, the license approval will be provided, along with the DIN, TAN, and PAN of the organization's directors. 

Step 7: Obtain Tax Exemption: 12A and 80G

You can apply under the Income Tax Act for section 12A ( income tax exemption) and the section 80G (donor benefits) registration. This is generally done to attract the corporate donors and the CSR partnerships along the way. 

Step 8: Apply For FCRA Registration (If Foreign Funds Are Involved)

FCRA registration with the Ministry of Home Affairs is mandatory if the NGO is planning to get. This process can generally take several months; it is advisable to apply early. 

Step 9: Maintain CSR Compliance

If the NGO plans to receive CSR (Corporate Social Responsibility) funds, the organization must maintain accurate reports and accounts and disclose in accordance with the CSR regulatory framework set out in the Companies Act. 

Common Mistakes NRI Must Avoid While Registering an NGO 

The following are some avoidable mistakes you might end up committing, which will, in turn, delay the registration process or incur penalties. Henceforth, taking proactive measures here is the key. 

• The first and most common mistake is failing to appoint an Indian director to the board, as required by law. 
• Inaccurate MOA and AOA drafting. Meaning unclear or vague objectives in the MOA or AOA can lead to rejection by the Ministry of Corporate Affairs. 
• Accepting foreign donations without maintaining FCRA compliance. Do not do this; adhere to FCRA compliance if the NGO plans to receive foreign donations, as non-compliance can result in severe penalties. 
• Delay in tax registration. That is, a late 12A/80G application can affect the fundraising. 

An NGO Registration Checklist For NRIs

The following table demonstrates an NGO registration checklist for NRIs and foreign nationals.

The Bottom Line

Stating an NGO in India as an NRI is not only legally permissible but also strongly encouraged when done right. However, as an NRI, you must follow the proper registration process and obtain the approval under Section FCRA, Section 8, Section 12A, and Section 80G in a timely manner.

As an NRI, if you are planning to register an NGO in India and seeking professional assistance for the same, Savetaxs is the name to trust. Our experts provide end-to-end consultation on legal, administrative, and compliance matters to operate the NGO formally, on fundraising, and to achieve tax exemption status. 

Our CAs will furthermore assist NRI in choosing the appropriate structure for the NGO that is a trust or a section 8 company, provide consultation on drafting the MOA, AOA, bylaws, and trust deeds, along with advisory on regulatory filing, post-registration support, and more.