A non-profit in Mumbai may be a public trust, a registered society, or a company licensed under Section 8 of the Companies Act, 2013. Whichever form it takes, the ongoing obligations are what determine whether it can actually function — receive grants, hold property, open accounts — and they are what organisations most often let slip.
The three forms, briefly
- A public trust is created by deed and registered under the Maharashtra Public Trusts Act, 1950. It is governed by a board of trustees, with succession as the deed provides.
- A registered society is created by memorandum and rules under the Societies Registration Act, 1860 — and in Maharashtra a charitable society is also registered under the Public Trusts Act, so it carries both sets of obligations.
- A Section 8 company is incorporated under the Companies Act with a licence permitting it to apply its profits to its objects and prohibiting dividends. Incorporation itself is company-secretarial work; what follows is a mix of corporate compliance and the ordinary law governing charitable activity.
Founders choosing between them should think about governance rather than prestige: a self-perpetuating board, an elected committee, or a company with directors and members. Conversion later is not straightforward, so the decision deserves time at the start.
The annual cycle for a trust or society
Under the Maharashtra Public Trusts Act the obligations are continuous:
- Keep regular accounts and balance them at the end of the accounting year.
- Have them audited, and file the audited statements in the prescribed schedules — the balance sheet, the income and expenditure account, and the statement of income liable to contribution.
- Report changes in the recorded entries by change report under Section 22, ordinarily within ninety days of the change.
- Hold trust money only in the forms the Act permits.
- Obtain prior sanction under Section 36 before selling, exchanging, gifting or granting a long lease of immovable property.
The detail is on the public trust compliance page. A society has all of that plus its own corporate-style obligations: elections held when due, a members’ register maintained, general body meetings held and minuted, and filings under the Societies Registration Act.
What a Section 8 company carries instead
A Section 8 company is subject to the Companies Act regime — board and general meetings, statutory registers, annual financial statements and annual return filings with the Registrar of Companies, auditor appointment, and the conditions attached to its licence. Much of that is work for a company secretary or chartered accountant rather than an advocate, and it is sensible to be clear about who is doing which part.
What does not change with the form is the rest of it: a Section 8 company carrying on charitable activity still needs its income tax position sorted out, still needs DARPAN registration to seek government grants, and still needs CSR-1 to receive corporate CSR money.
The registrations that sit on top
Whatever the form, an organisation seeking funding generally needs:
- NGO DARPAN registration with NITI Aayog;
- registration under Section 12A and approval under Section 80G of the Income-tax Act, and CSR-1 where corporate funding is in view — see 12A, 80G and CSR-1;
- and, where foreign contributions are involved, registration or prior permission under the foreign contribution legislation, which is a separate regime with conditions of its own and should not be assumed to follow from the others.
Where organisations come unstuck
Almost always in the same place. The organisation is doing good work, the board knows who it is, and the file does not. Trustees changed and no change report was filed, so the register names people who left a decade ago. Accounts were prepared but never filed. A property was let on an arrangement that quietly became long-term without sanction. None of it causes a problem until the day a funder, a bank or a buyer looks — and then all of it causes a problem at once.
Putting it right is a sequence rather than a single application: establish what the register actually says, file the outstanding reports in order, reconstruct and file the accounts year by year, and only then make the application that prompted the exercise. It takes time, and it is far easier done when nothing is pending.
A yearly review worth doing
- Does the register still name the people who are actually acting?
- Are the audited accounts filed up to the most recent year?
- Are the income tax registration and approval current, and when do they expire?
- Is DARPAN up to date, and CSR-1 where relevant?
- Is any property arrangement running that ought to have been sanctioned?
- Is the trust’s money held where the Act permits?
An hour spent on those six questions once a year prevents most of what brings organisations to chambers in a hurry.
Discussing a matter
Consultations are at chambers at 704 Classic Building, Gate No. 8, Malwani MHADA, Malad (West), Mumbai 400095, by appointment. Telephone or send a message on WhatsApp to +91 99301 50560, or use the contact page.
This page describes procedure in general terms. It is not legal advice, and what applies in a particular matter depends on its own facts and on the law as it stands at the time.
See also: FCRA basics for foreign donations.
Related guides
This page describes general procedure and is published for information only, in keeping with Rule 36 of the Bar Council of India Rules. It is not legal advice and does not solicit work. What applies to a particular matter depends on its own facts.