Procedure for the registration of a not-for-profit company (NGO)
Step 1: Online registration of the proposed name at OCR.
Step 2: Submission of the memorandum of association and the article of association along with the application for registration through the OCR dashboard once the name application is approved.
Step 3: After examination of all submitted documents, the Office of Company Register will issue a certificate of registration.
Step 4: Application for business registration at the concerned ward office
Step 5: Application for permanent account number (PAN) registration at the concerned tax office (IRD office)
Step 6: Registration at Social Welfare Council (SWC).
Step 7: Apply for Tax exemption at the tax office (IRD).
An organization that receives foreign grants must be registered with the Social Welfare Council. It is not necessary to register a corporation that does not accept foreign grants. However, it is a good idea to register any NFP companies or NGOs in Social Welfare Council.
Tax provisions and registration fees for NGOs
The government tax for registering a non-profitable corporation is Rs 15,000 at OCR, and there is no renewal fee. Also, you need to register your NGO at your ward office. They charge around 2000+ 10% of rent (TDS). You don’t have to pay anything at IRD office while registering. If you get a Tax exemption certificate, you don’t have to pay income tax on profit as well.
Restriction on profit distribution
Not-for-profit organizations are prohibited from delivering dividends, bonuses, or any other money derived from their revenues to their members. If the company makes a profit, it must reinvest money in services or business expansion in order to continue providing services. The company’s revenue and property are not distributable to its incorporators, members, directors, officers, or anybody related to any of them, and must be utilized to further the purpose for which it was formed. On the dissolution of the company, all the assets are transferred to Nepal Government.