NGOs must maintain proper books with fund-wise tracking, apply at least 85% of income to charitable objects in the year (or accumulate as permitted), account for corpus donations separately, keep FCRA funds in separate accounts, get accounts audited, and file ITR-7 with the audit report and Form 10BD donation statement on time.
Fund accounting
Track restricted, unrestricted and corpus funds separately so grant usage can be shown to donors and auditors.
Income application rules
- Apply 85% of income in the year
- Accumulate for specified purposes with Form 10 where needed
- Corpus donations treated separately
FCRA accounting
Foreign contributions go into the designated FCRA account and separate books, with FC-4 annual return.
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Get expert help →Annual compliance
- Audit of accounts
- Form 10B or 10BB audit report
- ITR-7
- Form 10BD and 10BE certificates
Frequently asked questions
Is audit mandatory for small NGOs?
Audit is required for NGOs claiming exemption when total income exceeds the basic exemption limit, and FCRA NGOs need audited accounts.
What is corpus donation?
A donation with a specific direction to form part of the corpus, kept separately and invested as prescribed.
Can NGOs accept cash donations?
Yes, but anonymous and large cash donations face tax restrictions, and donors get no 80G deduction for cash above Rs 2,000.
What happens if 85% is not applied?
The shortfall may become taxable unless validly accumulated.
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