Your NGO’s first year: a set-up and compliance checklist

A new NGO’s first year has four phases: set up its identity, bank account and records in the first month; get its tax registrations, policies and board working in the first three months; register properly once its activities start; and close the books, get them audited and file its returns after 31 March. This checklist takes you through each, with the deadlines from the law as it stands in October 2026.

It is written for a trust, society or Section 8 company registered in 2026-27, the first year of the Income-tax Act, 2025. If you haven’t registered yet, start with choosing a legal form. Dates move from year to year, and the government sometimes extends them, so check each one with your chartered accountant (CA) before you rely on it.

Phase 1: the first month

These come first, because almost everything else needs them.

Section 8 companies have extra early duties: the board must appoint the first auditor within 30 days of incorporation, and a company with a share capital files its declaration of commencement of business (Form INC-20A) within 180 days. See how to register a Section 8 company.

Phase 2: months one to three

Apply for income-tax registration. This is the most important step of the year. Under the Income-tax Act, 2025:

• If the organisation hasn’t started its activities, apply on Form 104 (formerly Form 10A) for provisional registration under Section 332 (formerly 12A and 12AB) and provisional approval for donors’ deduction under Section 354 (formerly 80G), in one application. The order comes in Form 106; the portal’s FAQs say it is generated automatically seven days after filing. Provisional registration lasts three tax years.
• If it has already started its activities, skip provisional registration and apply on Form 105 (formerly 10AB) for regular registration. The Commissioner has six months from the end of the quarter in which you apply to decide, and checks that your activities are genuine.

See income-tax registration for NGOs for the conditions.

Hold a proper board meeting. Approve the first-year budget, the bank signatories, the choice of CA, and your first policies. Minute every decision.

Adopt the core policies: financial controls and procurement, conflict of interest, and, if you work with children or vulnerable adults, safeguarding. Add a policy against sexual harassment (an Internal Committee under the POSH Act is compulsory once you have 10 or more employees) and a data protection policy (the main duties under the Digital Personal Data Protection Rules, 2025 apply from 13 May 2027). Our list of policies every NGO needs covers the rest.

Set up donor receipts. Number every receipt, record the donor’s name, address and PAN, and say plainly whether a tax deduction is available. Before your Section 354 approval, it isn’t. Even after it, cash gifts above ₹2,000 don’t qualify. And never accept ₹2 lakh or more in cash from one person in a day: Section 186 (formerly 269ST) bars it.

Get the employer basics right if you pay anyone. The four Labour Codes have been in force since 21 November 2025: every worker needs an appointment letter, minimum wages apply to all, and provident fund applies from 20 employees, with other benefits at their own thresholds. See the labour codes for NGOs.

Check GST only if you’ll sell goods or services, such as training, products or sponsorship. Registration is needed above ₹20 lakh of turnover for services or ₹40 lakh for goods only, with lower limits in some states. See GST for NGOs.

Phase 3: once your activities start

• File Form 105 within six months of starting your activities, if you have provisional registration. If you still haven’t started when the provisional registration is near its end, apply at least six months before it expires. Missing the deadline can cost you your registration and bring the tax on accreted income, a tax on the value of your net assets.
• Keep evidence of your work: attendance registers, activity reports, and photographs taken with consent. The Commissioner checks that activities are genuine before granting regular registration, and funders will ask for the same records.
• Keep project money apart. Track each grant separately, especially money given for a specific purpose. See accounts and audit for NGOs.
• Report changes promptly. New trustees or governing body members may need reporting to your registrar or Charity Commissioner (Maharashtra asks for changes to be reported within 90 days). If you change your objects, apply again on Form 105 within 30 days.
• Pay by bank, not cash, and deduct TDS where it’s due. Cash payments of more than ₹10,000 to one person in a day generally don’t count as spending on your objects for tax purposes, and nor does 30% of a payment on which you should have deducted tax at source but didn’t (Section 341(1)(a) of the 2025 Act, applying Sections 36(4) and 35(b)(i)).

Phase 4: year-end and the first filings

The financial year, which the 2025 Act calls the tax year, ends on 31 March. Then:

1. Close the books. Reconcile every bank account, list fixed assets, list unspent grant balances and check donor records.
2. Get the accounts audited by a CA if the organisation’s total income, before the exemption, exceeds the basic exemption limit (Sections 347 and 348). Section 8 companies are audited every year under the Companies Act anyway.
3. File the statement of donations in Form 113 (formerly 10BD) by 31 May, if you have Section 354 approval, and issue each donor a certificate in Form 114 (formerly 10BE). Late filing costs ₹200 a day.
4. File the audit report in Form 112 (formerly 10B and 10BB) one month before the return is due, that is by 30 September.
5. File the income-tax return by 31 October, for organisations whose accounts must be audited. The return form for tax year 2026-27 under the new Act hadn’t been notified when this guide was written.
6. File the yearly returns under your own law: a society’s annual list of its governing body within 14 days of its annual general meeting; a trust’s filings where its state’s public trust law requires them; a Section 8 company’s AGM (the first within nine months of the end of its first financial year), Form AOC-4 within 30 days of it and Form MGT-7 within 60 days.

The first-year calendar at a glance

For an NGO registered in 2026-27, assuming no extensions:

Later: CSR-1, FCRA and renewals

CSR-1. To receive CSR money as an implementing agency, an NGO needs both income-tax registrations and a CSR-1 registration number from the Ministry of Corporate Affairs. An NGO not set up by a company or a government also needs an established track record of at least three years in similar activities (Rule 4(1)(d) of the CSR Rules). Plan to fund your first years from individuals, local businesses, foundations and your community. See Form CSR-1.

FCRA. You can’t accept money or goods from a foreign source without registration or prior permission under the Foreign Contribution (Regulation) Act, 2010. Registration is generally for organisations at least three years old that have spent at least ₹15 lakh on their aims, excluding administrative costs, in the last three financial years; before that, a newer organisation with a committed foreign donor applies for prior permission for that donor, amount and purpose. See what FCRA is.

Renewals. Put every expiry date in a shared calendar with a reminder a year ahead. Regular registration lasts five tax years, or ten when it follows provisional registration or renews an earlier one and the organisation’s total income (before the exemption) was ₹5 crore or less in each of the two tax years before it applied. The donor-deduction approval lasts five years either way. Renew each at least six months before it expires.

Common first-year mistakes

• Starting activities and forgetting the six-month deadline for Form 105.
• Promising donors a tax deduction before approval, or accepting large cash donations.
• No books until the auditor asks for them in September.
• Board meetings that never happen, or happen without minutes.
• One person holding every login, password and signature.
• Policies downloaded from the internet and never adopted by the board.

The Academy’s Starting an NGO course includes a yearly compliance calendar you can adapt, and Running a CSR Foundation covers the same ground for a company’s foundation.