CSR Compliance for NGOs (Form CSR-1)

An NGO intending to receive CSR contributions must obtain a unique CSR Registration Number by registering on the MCA21 portal in Form CSR-1, as mandated under Rule 4(2) of the Companies (CSR Policy) Rules 2014 with effect from April 1, 2021. The NGO must be a registered public trust, registered society, or Section 8 company with a minimum three-year track record in the relevant CSR activity area before it can act as an implementing agency. Additionally, for receiving foreign contributions, the NGO must hold a valid registration or prior permission under Section 11 of the Foreign Contribution (Regulation) Act 2010 and must file Annual Return FC-4 within nine months of the close of each financial year. Non-registration on the MCA CSR portal disqualifies the NGO from receiving CSR funds, and any company routing funds to such an unregistered entity risks the expenditure not being counted toward its CSR obligation.

Under Section 18 of the Foreign Contribution (Regulation) Act 2010 read with Rule 17 of the Foreign Contribution (Regulation) Rules 2011, every FCRA-registered organisation must file Annual Return FC-4 electronically within nine months of the close of the financial year, along with a certified statement of accounts. Foreign contributions must be received only in the designated FCRA bank account at State Bank of India, New Delhi Main Branch as mandated by the MHA notification issued under Section 17(1) of the FCRA. The organisation must maintain a separate set of accounts exclusively for foreign contribution receipts and expenditures and must not divert foreign contributions for purposes other than those for which registration was granted. Failure to file FC-4 or maintaining commingled accounts can result in cancellation of registration under Section 14 of the FCRA, which bars the organisation from receiving foreign funds for five years.

Yes, a Section 8 company must file its income tax return under Section 139(4A) of the Income Tax Act 1961 if its income before claiming exemption exceeds the basic exemption limit. Exemption on income applied to charitable or religious purposes is available under Section 11 of the Income Tax Act 1961, provided the organisation is registered under Section 12A (or Section 12AB for registrations obtained or renewed after April 1, 2021 per the Finance Act 2020 amendment). Donations received by the NGO are eligible for deduction in the hands of donors under Section 80G only if the NGO holds a valid 80G approval certificate, which must now be renewed periodically following the same Finance Act 2020 amendment. If more than 15% of income is accumulated and not applied during the year, Form 9A and Form 10 must be filed before the due date of the return to preserve exemption under Section 11(2).

A Section 8 company must file Annual Return in Form MGT-7A (for small companies) or Form MGT-7 along with financial statements in Form AOC-4 with the Registrar of Companies within 60 days and 30 days respectively of the Annual General Meeting as required under Sections 92 and 137 of the Companies Act 2013. Section 8 companies are also required to hold at least one AGM each year under Section 96 and must file Form ADT-1 for auditor appointment under Section 139. Any change in objects requires prior approval of the Regional Director under Section 8(6) read with the Companies (Incorporation) Rules 2014, unlike ordinary companies where shareholders alone approve object amendments. Non-filing of annual returns attracts late fees under Section 403 and can eventually lead to strike-off proceedings under Section 248 of the Companies Act 2013.

Yes, these are two separate and compatible routes: the contributing company counts the expenditure toward its 2% CSR obligation under Section 135 of the Companies Act 2013, while its employees or other donors to the NGO can separately claim deduction under Section 80G of the Income Tax Act 1961 on donations made in their personal capacity. However, the company itself cannot claim a deduction under Section 80G or Section 80GGA for amounts spent on CSR that are mandatorily required under Section 135, as clarified by Explanation 2 to Section 37(1) which was inserted by the Finance Act 2014 and disallows CSR expenditure as a business deduction. The NGO must hold a valid 80G certificate renewed under the post-April 2021 regime and issue a stamped receipt with its PAN and 80G registration number to eligible donors. Donations above ₹2,000 in cash are not eligible for 80G deduction under Section 80G(5D) of the Income Tax Act 1961.