OVERVIEW
In India, companies that meet certain criteria are required to spend a certain amount of their profits on Corporate Social Responsibility (CSR) activities as per the Companies Act, 2013. The Act mandates that certain companies have to constitute a CSR committee, formulate a CSR policy, and spend at least 2% of their average net profits made during the three immediately preceding financial years on CSR activities.
To undertake CSR activities, companies can either carry out the activities themselves or collaborate with implementing agencies or non-governmental organizations (NGOs) working in the relevant areas.
If a company chooses to collaborate with implementing agencies or NGOs for its CSR activities, it is important to ensure that the collaborating entity is registered under Section 12A and 80G of the Income Tax Act, 1961. Registration under these sections enables the entity to receive tax benefits for donations made to it, which can be useful for companies that want to avail of tax benefits for their CSR activities.
In addition, the Ministry of Corporate Affairs (MCA) has also launched a voluntary online platform called the “National CSR Data Portal” to facilitate CSR reporting and compliance by companies. Companies can register on the portal to showcase their CSR activities, and NGOs and other implementing agencies can also register to showcase their work and connect with companies for potential collaboration.
DOCUMENTS REQUIRED
Document Requirement for Form CSR-1 Registration for NGO:
The following documents are generally required for CSR-1 Registration in India:
- Certificate of registration under the Societies Registration Act, 1860, or any other relevant Act.
- Memorandum of Association (MoA) and Articles of Association (AoA) of the NGO.
- Certificate of registration under Section 12A and 80G of the Income Tax Act, 1961.
- PAN (Permanent Account Number) Card of the NGO.
- Audited financial statements of the NGO for the previous three years.
- Annual report of the NGO detailing its activities and impact.
- Details of the NGO’s board members and key personnel.
- Project Details: The company must provide details of its charitable activities and projects, including the area of operation, beneficiaries, and expected outcomes.
Document Requirement for 80G Registration of Section-8 Company:
The following documents are generally required for 80G registration of a Section-8 Company in India:
- Memorandum of Association:
The Memorandum of Association is the most important document required for 80G registration. It should be properly executed and registered with the concerned authority.
- Certificate of Incorporation:
The Section-8 Company must be registered with the Registrar of Companies, and a copy of the Certificate of Incorporation must be submitted with the application.
- PAN Card:
A copy of the Permanent Account Number (PAN) card of the company must be submitted.
- Audited Financial Statements:
The company must submit audited financial statements for the previous three years, including the balance sheet, income and expenditure statement, and receipts and payments statement.
- Details of Directors:
The company must provide details of its directors, including their names, addresses, and PAN numbers.
- Project Details:
The company must provide details of its charitable activities and projects, including the area of operation, beneficiaries, and expected outcomes.
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An affidavit from the board of directors stating that the Section-8 Company’s income will be used for charitable purposes only and that the Section-8 Company will comply with the regulations and laws governing Section-8 Companies and charitable trusts.
REGISTRATION PROCESS
Process of Form CSR-1 Registration for NGO
To obtain a Certificate of Registration (CSR) under the Indian Companies Act, 2013 using Form CSR-1, companies need to follow the below registration process:
- Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN): The first step in the CSR-1 registration process is to obtain a DSC and DIN for the directors of the company. These are required for the online filing of the CSR-1 application.
- Fill out the CSR-1 application form: Once the DSC and DIN are obtained, the company needs to fill out the CSR-1 application form online. The form requires the company to provide details of its directors, registered office address, business activities, CSR policy, and other relevant information.
- Upload the necessary documents: Along with the CSR-1 application form, the company needs to upload the necessary documents such as the Memorandum of Association, Articles of Association, PAN Card, Address proof, and other documents required by the Registrar of Companies (RoC).
- Pay the registration fees: The company also needs to pay the CSR-1 registration fees, which are based on the authorized capital of the company.
- Submission of the CSR-1 application: Once the application form and documents are uploaded and the fees are paid, the company can submit the CSR-1 application online.
- Verification and approval by RoC: After submission, the RoC will verify the application and documents submitted by the company. If everything is in order and the RoC is satisfied with the information provided, it will issue the CSR certificate to the company.
NGOs that receive CSR funds from companies need to comply with certain requirements to ensure that the funds are utilized effectively and in compliance with the Companies Act, of 2013. Some of the key compliance requirements for NGOs include:
- Ensure alignment with the company’s CSR policy: The NGO needs to ensure that its activities are aligned with the company’s CSR policy and objectives.
- Maintain proper records and accounts: The NGO needs to maintain proper records and accounts of the funds received and spent on CSR activities. It should ensure that the funds are spent in compliance with the Companies Act, 2013 and the Schedule VII of the Act.
- Submit annual reports: The NGO needs to submit an annual report to the company providing details of the CSR activities undertaken and the impact of the activities.
- Comply with all legal and regulatory requirements: The NGO needs to comply with all legal and regulatory requirements, including the Income Tax Act, of 1961, and the Foreign Contribution Regulation Act, of 2010.
- Undertake monitoring and evaluation: The NGO needs to monitor and evaluate the impact of its CSR activities regularly. It should review its activities periodically and make necessary changes to align them with the company’s CSR objectives and priorities.
Compliance with these requirements can help NGOs to demonstrate their accountability and transparency in the utilization of CSR funds and contribute effectively to social and environmental development. NGOs need to ensure that they comply with the legal and regulatory requirements and report accurately and transparently on their CSR activities to maintain their credibility and reputation.
Top 10 Advantages of Form CSR-1 Registration for NGO
NGOs can collaborate with registered companies to receive CSR funds and undertake CSR activities. Some of the advantages of such collaboration for NGOs include:
- Increased funding: Collaboration with registered companies can provide NGOs with increased funding for their activities, which can help them to scale up their programs and reach a larger audience.
- Enhanced visibility: Collaboration with registered companies can enhance the visibility of the NGO and its activities, which can help in attracting more funding and support.
- Access to expertise: Collaboration with registered companies can provide NGOs with access to expertise and resources that they may not have in-house. This can help in developing and implementing effective programs.
- Networking opportunities: Collaboration with registered companies can provide NGOs with networking opportunities, which can help in building partnerships and collaborations with other organizations.
- Improved credibility: Collaboration with registered companies can improve the credibility of the NGO, as it demonstrates the NGO’s ability to work with diverse stakeholders and deliver effective programs.
- Better governance: Collaboration with registered companies can help NGOs to improve their governance structures and processes, as they may be required to adhere to certain standards and regulations.
- Access to new markets:
Collaboration with registered companies can provide NGOs with access to new markets, which can help in expanding their programs and reaching new beneficiaries.
- Increased impact: Collaboration with registered companies can help NGOs to increase their impact and effectiveness, as they may be able to implement larger and more comprehensive programs.
- Improved sustainability: Collaboration with registered companies can help NGOs to improve their sustainability, as they may be able to secure long-term funding and support for their activities.
- Greater accountability: Collaboration with registered companies can improve the accountability of the NGO, as they may be required to report on their activities and outcomes to the companies providing funding.