Non-Governmental Organizations (NGOs) play a vital role in the process of social and economic development of the economy. With passing time, there can be said to be a substantial increase in the activities of the Indian NGOs. The Ministry of Corporate Affairs brought a uniform accounting and reporting framework for NGOs
NGOs are established as public trusts as per Trust Laws, or as per Societies Registration Act or as Companies under the Companies Act, 2013. All these acts apply to entities as per their choice of the constitution. Further, this act requires the NGO to receive a foreign contribution for getting its books of accounts audited by the Chartered Accountants.
The NGO must get its accounts audited as per the Incorporation Law depending on their mode or form of Registration. NGO Audit must be done as per the Societies Act, Trust Act, or Companies Act, 2013. NGO Audit must also be done as per the Income Tax Act, 1961. As prescribed in Section 12A (b), the Income-tax law audit becomes compulsory for NGOs where the total income of an entity exceeds the maximum amount which is not chargeable to Income Tax in any previous year. The receivables of an organization should be compulsorily audited as per Section 12 A (b) of the Income Tax Act, 1961.
