Advantages of a Non-Profit Organization in India

June 11, 2025
Registrationwala

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Advantages of a Non-Profit Organization in India

Advantages of a Non-Profit Organization in India

June 11, 2025

Registrationwala

Preface: This post was originally published in 2022 and has been updated on June 11, 2025, to provide you with the most current and accurate information.

A Non Profit Organization means a legal entity established with the intention to promote social welfare, cultural, religious or professional objectives. An NPO can be set up as a Trust, Society or a Section 8 Company in India. Such organizations aren’t driven by profit motive. Their sole purpose is to provide goods and services to the public. Any revenue they generate is solely used to support their activities and not for any personal/selfish motives.

In this blog post, we shall explain the advantages of non profit organization in India. So, if you are planning to set up an NPO, this blog post will help you understand the key benefits of doing so.

What is Non Profit Organization?

A Non Profit Organization is a general term used to refer to a Trust, Society or Section 8 Company established in India. The primary aim of an NPO is to promote social welfare, cultural, religious or professional goals.

Unlike for-profit organizations, non-profit organizations do not give their owners or shareholders a portion of their revenues. Rather, they put any extra funds back into their goals and activities.

The main laws governing NPOs in India include: (i) the Societies Registration Act 1860 (ii) the Indian Trusts Act 1882 and (iii) Section 8 of the Companies Act 2013 (formerly Section 25 of the Companies Act 1956).

Advantages of Forming a Non Profit Organization

The advantages of establishing India Non Profit Organization are as follows:

By setting up an NPO, you can help to make society a better place. You can contribute your time, skills and resources to causes that uplift underprivileged communities and bring about a positive change.
One major advantage of a non-profit organization is its perpetual existence. Such an entity can exist long after its founder's departure, as long as its mission stays relevant and it continues to generate support as well as revenue.
Sections 12A and 80G of the Income Tax Act 1961 grant tax exemptions to registered non-profit organizations and allow them to keep more money for their charitable missions. The NPOs in India are able to connect with more beneficiaries and expand their projects due to this financial help.
Nowadays, businesses in India are spending more money on Corporate Social Responsibility (CSR) projects, which frequently require giving money to non-profit businesses that support social causes. As a result, your NPO can take advantage of CSR opportunities to get funding and work with others on impactful projects.
Donations to non-profit organizations are generally deductible from taxable income for both individuals and businesses. This tax advantage guarantees a consistent flow of donations to the organization and promotes philanthropy.
The personal assets of the non-profit entity's owners or workers cannot be sued. Only the corporate organization may be sued for a business-related debt or injury. Because of this limited liability protection, the founders and employees can run the company more safely, without worrying about their personal assets.
The public will interpret your organization's NGO darpan registration as a sign that responsible and successful leadership is in place. In order to achieve common objectives, political parties, governmental organizations, donor agencies, financial institutions, charitable organizations and other NGOs will be more likely to collaborate with a registered entity like yours.
Non profit organization fundraising opens up diverse avenues for financial support. This allows the NPO to maintain operations with consistency as well as expand its reach without relying on commercial profits.
To accomplish their goals, NPOs can partner with other groups, create networks and interact with stakeholders. These partnerships promote long-term sustainability, boost impact and raise awareness.

How to Start Non Profit Organization in India?

Convinced you want to start an NPO by learning about all the key advantages? Here are the necessary steps to start an NPO in India:

Step 1: First, you need to choose the type of NPO you want to establish. The major options available are: (i) Trust, (ii) Society and (iii) Section 8 Company.

Step 2: After you decide on the NPO entity type, you must complete the registration process accordingly. If you choose Trust, you will have to register it with the local Sub-Registrar under the Indian Trusts Act 1882. For a Society, you must register it with the Registrar of Societies under the Societies Registration Act 1860. If you opt for Section 8 Company under Companies Act 2013 you will need to obtain a registration certification from the Registrar of Companies.

Step 3: Next, apply for PAN and TAN for your NPO from the Income Tax Department. These documents are necessary for opening a bank account as well as fulfilling tax compliance requirements.

Step 4: To receive donations, grants and other funds legally, you must open a bank account in the name of the NPO.

Step 5: Another step you must complete is applying for 12A registration with the Income Tax Department to claim tax exemption on income. This will ensure your NPO’s income is not subject to taxation by the Government of India.

Step 6: We recommend you to register on the NGO Darpan Portal. It is a voluntary step that opens doors to government schemes, funding opportunities and official recognition. However, for FCRA registration (for receiving foreign funds), NGO Darpan registration is a mandatory requirement.

Step 7: Apply for 80G certification so that donors can claim tax deductions for their contributions to your NPO. Securing this certification will help your NPO attract more donors.

Step 8: When your NPO is finally in operation, you must ensure it stays compliant with legal and regulatory requirements like filing annual reports, income tax returns, audit of non profit organization and renewal of necessary licenses/certifications as and when required.

Conclusion

An NPO is a legal entity registered under the Societies Registration Act 1860, the Indian Trusts Act 1882 or Section 8 of the Companies Act 2013. If you want to run an organization that works for the betterment of the society, you can consider opening a Non Profit Organization in India.

Need to register your non-profit organization in India? Connect with Registrationwala for assistance.

Frequently Asked Questions (FAQs)

Q1. What are the different types of Non Profit Organizations in India?

A. In India, different types of NPOs include Trusts, Societies and Section 8 Companies.

Q2. How can I secure foreign funding for my NPO?

A. To secure foreign funding for your not-for-profit organization, you must secure FCRA (Foreign Contribution Regulation Act) registration. Connect with Registrationwala’s FCRA consultants to know more.

Q3. Do I need a Permanent Account Number for my NPO?

A. Yes, every NPO must mandatorily secure a Permanent Account Number.

Q4. Can I establish an NPO to promote a specific religion?

A. Yes, you can establish an NPO to promote a specific religion as long as it adheres to the specific legal and regulatory requirements in India.

Q5. Which law governs Section 8 Companies in India?

A. The Companies Act 2013 is the primary law for governing and regulating Section 8 Companies in India.