Many companies in India give money to support good causes through their Corporate Social Responsibility (CSR) programs. But before an NGO can receive this help, it needs to follow some important rules. These rules are called NGO compliances for CSR funding under Income Tax Act.
If you run an NGO or want to start one, understanding these rules is very important. Companies will only give you CSR funds if your NGO meets the required conditions set by the government. Let’s look at these requirements in easy words.
Why Do NGOs Need to Follow These Rules?
CSR funds are not just random donations. They are regulated by law. The Income Tax Act and the Companies Act make sure the money given for social good is used properly.
That’s why NGO compliances for CSR funding under Income Tax Act exist. These compliances help the government and companies know that your NGO is genuine, trustworthy, and using funds for the right reasons.
Main Requirements to Receive CSR Funds
Here are the key things an NGO must have to get CSR funds legally and safely:
1. 12A Registration
Your NGO must be registered under Section 12A of the Income Tax Act. This allows your organization to be recognized as a not-for-profit entity. It also helps your income to be tax-exempt.
Without 12A registration, your NGO will be treated like a regular business and will not be eligible to receive CSR funds from companies.
2. 80G Registration
Having 80G registration allows donors to claim tax deductions on the money they donate to your NGO. While it’s not mandatory for CSR funds, it builds more trust.
Many companies prefer to donate to NGOs that have both 80G and 12A registration, as it shows your organization is serious and well-compliant.
3. Registration on MCA21 Portal (Form CSR-1)
This is one of the most important parts of NGO compliances for CSR funding under Income Tax Act.
Every NGO that wants to receive CSR funding must fill out Form CSR-1 and get registered on the MCA21 portal (Ministry of Corporate Affairs website). Once your form is approved, you will get a Unique CSR Registration Number.
Without this, companies cannot transfer CSR funds to your NGO—even if you have all other documents in place.
Other Important Compliances
Apart from the main ones above, here are some additional things to keep in mind:
Proper PAN and Bank Account
Your NGO should have a valid PAN card and a separate bank account in the name of the organization to receive CSR donations.
Annual Financial Audits
Regular financial audits help ensure the money received is being used correctly. Companies will often ask for audit reports before funding.
Detailed Project Reports
Your NGO must be ready to share CSR fund utilization reports. This includes what the money was used for, how it helped people, and whether the goals were met.
Companies must also report this to the government, so they need accurate data from you.
What Makes an NGO Eligible for CSR Funds?
The CSR eligibility for NGOs includes:
- Being registered as a trust, society, or non-profit company
- Having 12A registration
- Being registered on MCA21 (CSR-1)
- Operating for a minimum of 3 years (preferred by many companies)
- Having good governance and transparency
Meeting these conditions shows that your NGO is not only legal but also dependable.
Final Thoughts
Getting CSR funds can really help your NGO grow and do more good work. But for that, you need to follow the proper NGO compliances for CSR funding under Income Tax Act.
From 12A and 80G registration to filing CSR-1, each step is important. Once your NGO is fully compliant, you become more attractive to companies looking for genuine partners to fulfill their CSR goals.
Always remember—compliance is not just paperwork. It’s a way to build trust, stay legal, and make your organization stronger for the long run.
