Introduction
Registering a society in Jaipur, Rajasthan, is a pivotal step for organizations aiming to serve the public good, whether for education, health, or social development. However, the journey doesn’t end with registration. Post-registration compliance for NGOs is crucial to function smoothly and maintain their legal standing. This blog offers a technical overview of the key NGO legal compliance requirements to be adhered to after registration under the Rajasthan Societies Registration Act, 1958 or the Societies Registration Act, 1860, ensuring that your organization remains law-abiding and transparent.
By focusing on the importance of NGO compliance services, this guide will help you understand how to navigate through ongoing legal obligations and avoid penalties.
1. Post-Registration Compliance Requirements: An Overview
Once a society is registered as an NGO in Jaipur, the legal responsibilities don’t stop there. The society must comply with various regulations designed to ensure transparency, proper governance, and accountability. Legal compliance for NGOs includes the following:
- Annual Filing Obligations
- Taxation Compliances
- Labour Law Compliances
- Foreign Contribution Regulation
- Sector-Specific Legal Compliances
Each of these categories has its own set of rules and requirements, which NGOs must follow to avoid legal issues and penalties.
2. Annual Filing Obligations: Registrar of Societies
Annual General Meeting (AGM) and Filing of Annual Returns
According to Section 4 of the Rajasthan Societies Registration Act, every registered society (NGO) must hold an Annual General Meeting (AGM). This meeting serves as the foundation for governance and provides the platform for:
- Reviewing the society’s performance.
- Discussing financial reports.
- Electing new governing members.
- Amending the society’s bylaws if required.
If annual general meeting of the society is held as per the rules and regulations of the society, the list shall be filed with the Registrar within 14 days of such AGM specifying names, addresses and occupations of the governors, directors, trustees or members of the council, committee or other governing body then entrusted with the management of the affairs of the society. But where the rules and regulations don’t provide for an annual general meeting, such annual filing shall be done in the month of January every year.
Submission of Annual Returns to the Registrar of Societies is a key compliance which must be completed within the prescribed time frame as above. These returns must include:
- The society’s financial statements for the fiscal year (audited).
- A list of the society’s office bearers and governing body members.
- A summary of activities undertaken by the society.
Failure in timely filing of annual returns may be punished with a fine extending to Rs. 500 and in case of continuing breach, with a further fine not exceeding Rs. 50 for each day during which the default continues.
3. Taxation Compliance for NGOs
a) Income Tax Act, 1961 - Tax Exemption for NGOs
NGOs in Jaipur that are set up for charitable, educational, or religious purposes are eligible to apply for tax exemption under Section 12A of the Income Tax Act, 1961. Tax exemption under section 12A is for 5 years initially which can be again renewed for further 5 years. This status allows NGOs to receive donations and carry out activities without incurring income tax, provided they follow the guidelines outlined for charitable organizations.
To maintain this tax-exempt status, NGOs must:
- Get Annual Accounts audited every year on or before 30th September
- File annual Income Tax Returns under Section 139, even if they have no taxable income, on or before 31st October.
- Maintain comprehensive records of donations and expenditures.
- File Annual Return of donations in Form 10BD
- Apply for tax deduction certificates under Section 80G for donors in Form 10BE
b) Goods and Services Tax (GST) Compliances
If the NGO engages in the provision of taxable goods or services and its turnover exceeds the prescribed GST threshold, it is required to register under the Goods and Services Tax Act, 2017. Once registered, the NGO must:
- File GST returns regularly (monthly or quarterly).
- Issue GST-compliant invoices for taxable services or goods.
- Pay applicable taxes on any taxable services.
Compliance with GST laws helps avoid penalties and ensures that your NGO remains in good legal standing.
4. Labour Law Compliance for NGOs
NGOs having employees must comply with relevant labour laws in Rajasthan. These laws are designed to protect workers’ rights and ensure fair treatment. The key labour law compliance requirements for NGOs include:
a) Employees' Provident Fund (EPF) and Employees' State Insurance (ESI)
- EPF Compliances: If the NGO employs more than 20 employees, it must register with the Employees’ Provident Fund Organization (EPFO) and make contributions to the employees’ provident fund, pension scheme, and insurance scheme under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
- ESI Compliances: For NGOs employing more than 10 employees, it is mandatory to register with the Employees' State Insurance Corporation (ESIC) and contribute to the ESI fund. This fund provides employees with medical benefits, maternity benefits, and sickness benefits.
b) Payment of Wages and Gratuity
NGOs must also comply with the Minimum Wages Act, 1948, ensuring employees receive at least the minimum prescribed wages. Additionally, under the Payment of Gratuity Act, 1972, NGOs employing 10 or more individuals must provide gratuity to employees who have worked for more than five years.
5. Foreign Contribution Regulation Act- FCRA Compliances
NGOs receiving foreign donations or funds must comply with the provisions of the Foreign Contribution (Regulation) Act, 2010 (FCRA). FCRA registration is mandatory for organizations that intend to accept foreign contributions. To comply, an NGO must:
a) Obtain FCRA Registration
The NGO must apply to the Ministry of Home Affairs for FCRA registration, which is mandatory for any organization wishing to receive foreign contributions. Eligibility for FCRA registration includes:
- The NGO must have been in existence for at least three years.
- It must demonstrate a proven record of social, educational, or charitable activities
b) Annual Reporting
Once registered, the NGO must submit an annual return to the Ministry of Home Affairs detailing the foreign funds received and the manner these are utilized. This report must be submitted within nine months from the end of the financial year.
Non-compliance with FCRA regulations could result in the cancellation of the NGO’s registration, preventing it from receiving future foreign contributions.
6. Sector-Specific Compliances for NGOs
In addition to the general legal requirements, NGOs may need to comply with specific sector-based regulations depending on their area of operation:
- Educational NGOs: If the NGO operates educational institutions, it must comply with the Rajasthan Education Rules and the Right to Education (RTE) Act.
- Healthcare NGOs: NGOs running healthcare facilities must follow the Clinical Establishments (Registration and Regulation) Act, 2010 and other related healthcare regulations.
- Environmental and Social Impact NGOs: Environmental NGOs must adhere to the Environment Protection Act, 1986, and social impact organizations must follow specific welfare and charity-related laws. For example, a society running an orphanage must be registered with Samaj Kalyan Department.
7. Penalties for Non-Compliance
Failure to adhere to post-registration compliance requirements can lead to significant penalties and legal actions:
- Revocation of Registration: Under the provisions of the Rajasthan Societies Registration Act, the government can cancel the registration of a society that fails to comply with statutory obligations.
- Monetary Penalties: Non-compliance with tax regulations, labour laws, or FCRA provisions can result in fines and penalties as per the respective Acts.
- Loss of Tax-Exempt Status: Failure to comply with the Income Tax Act or GST Act may lead to the revocation of the NGO’s tax-exempt status, affecting its fundraising capacity.
Conclusion
Legal compliance is an ongoing responsibility for NGOs in Jaipur and Rajasthan. From maintaining accurate financial records and adhering to labour laws to ensuring foreign contribution compliance, NGOs must stay vigilant and proactive to meet all legal obligations. Consulting with professionals specializing in NGO compliance services is critical for maintaining operational transparency and avoiding penalties. By staying compliant, your NGO can continue to thrive and focus on its mission of social impact.
If you’re managing an NGO in Jaipur, Rajasthan, it’s essential to stay updated on your legal obligations. Engage with experts in NGO compliance services to ensure your organization adheres to all regulatory requirements. Reach out today to safeguard your NGO’s operations and ensure long-term sustainability.
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At Taxwink, we specialize in providing comprehensive NGO taxation and accounting compliance services to ensure that your organization meets all legal requirements without hassle. From securing tax-exempt status under Section 12A to handling GST filings and income tax returns, our team of experts is equipped to manage every aspect of your NGO’s financial compliance. With years of experience in working with NGOs in Jaipur and Rajasthan, Taxwink ensures that your organization remains fully compliant with state and central regulations, allowing you to focus on your mission. Partner with us for reliable, accurate, and timely NGO tax services.
