NGO Accounting Services
Trusts, societies and Section 8 companies registered for tax exemption must keep the books listed in Rule 17AA and preserve them for 10 years. We maintain your accounts month by month, keep FCRA funds separate, track the 85% application rule and hand over audit-ready statements every year.
What it is
NGO accounting is bookkeeping built around one question: was the money used for the purpose it was given? A trading business tracks profit. An NGO tracks donations, grants and corpus funds, and shows where each rupee went. So the statements look different: a receipts and payments account, an income and expenditure account and a balance sheet, often with project-wise schedules.
For organisations registered under section 12A/12AB or approved under section 10(23C), Rule 17AA of the Income-tax Rules, 1962 (CBDT Notification No. 94/2022, 10 August 2022) lists the books to be kept from AY 2023-24 onwards. Registrations valid on 1 April 2026 carried into section 332 of the Income-tax Act, 2025, and FY 2025-26 is still governed by the 1961 Act. If you hold an FCRA certificate, section 19 of the FCRA, 2010 adds a separate account of foreign contribution.
Who it applies to
You run a trust or society
Charitable trusts and registered societies claiming exemption. In Haryana, a society also files its annual return with a balance sheet with its District Registrar under the Haryana Registration and Regulation of Societies Act, 2012.
You run a Section 8 company
A Section 8 company claiming exemption keeps books under the Companies Act and the Rule 17AA records on top. One set of accounts has to satisfy both.
You manage grants or foreign funds
NGOs that receive CSR money, government grants or foreign contribution, where every funder expects its money shown separately.
Why it matters
Proves the 85% application
To keep income tax-free, at least 85% of income must be applied to the objects, or accumulated in Form 9A/10 (Form 108/109 from tax year 2026-27). Your books have to show that number.
Feeds every return
The audit report, ITR-7, the Form 10BD donation statement and FCRA’s FC-4 all draw from the same ledgers. Errors in the books flow into all four.
Keeps funders confident
CSR partners and government departments ask for utilisation certificates that must tally with the audited accounts. Fund-wise books make the match simple.
Documents required
To set up
- Trust deed, bye-laws or MoA/AoA
- PAN, 12A/80G orders, FCRA certificate if any
- Last audited accounts
- List of trustees or governing body members
Every month
- Bank statements for all accounts
- Donation receipts issued
- Bills, vouchers and salary sheets
- Grant or CSR fund release letters
For each project
- Grant agreement and approved budget
- Beneficiary or activity records
- Asset purchases under the project
Books and records we keep for you
| Record | What it shows | Where it comes from |
|---|---|---|
| Cash book, ledger, journal | Every receipt and payment, classified | Rule 17AA |
| Bills and receipt counterfoils | Proof behind each entry | Rule 17AA |
| Project and institution records | Income and spending of each activity | Rule 17AA |
| Corpus, loans and investments | Restricted funds, borrowings and where surplus is kept | Rule 17AA |
| Specified-person transactions | Dealings with trustees and their relatives | Rule 17AA, section 13(3) |
| Foreign contribution account | Receipt and use of foreign funds | FCRA, 2010 section 19 |
The records can be kept in electronic form at the registered office, or at another place in India chosen by a management resolution and intimated to the Assessing Officer. They must be preserved for 10 years from the end of the relevant assessment year.
In practice, picture a Faridabad society running a tailoring centre on a CSR grant and a computer course on local donations. If both sit in one “programme expenses” head, nobody can prove the CSR money went where the agreement said. Separate heads settle it before the funder asks.
How it works
Review your current books
We read the deed, registrations and last audited accounts, and list gaps in this year’s records. If you only need plain ledgers, our online bookkeeping service may be enough. Most NGOs need the fund-wise layer too.
Build a fund-wise chart of accounts
We set up heads for general donations, corpus, each grant and each project, with a separate set for the FCRA account.
Record and reconcile every month
Entries go in from your bank statements and vouchers, then get reconciled. Here is the catch: most NGO trouble starts with a bank account nobody reconciled. A trust that updates its books only at year end often finds credits with no donor details, and those can end up treated as anonymous donations. You also get a short monthly report of spending against each budget.
Track donors and deductions
We keep the donor register needed for the annual donation statement and handle TDS deduction and returns on salaries and fees.
Close the year for audit
We prepare the financial statements, the application-of-income working and the schedules your auditor needs.
Timelines
Reconcile every month
Books updated and bank accounts reconciled, including the FCRA account.
Report donations by 31 May
Donation statement in Form 10BD (Form 113 from tax year 2026-27) and donor certificates, which rely on the donor register.
Close FY 2025-26 on time
Audit report for FY 2025-26 by 21 October 2026, ahead of ITR-7 by 21 November 2026. FCRA annual return FC-4 by 31 December 2026.
What happens if the books are not in order
The shortfall gets taxed
If application falls below 85% and no accumulation form is filed by the return due date, the shortfall is taxed as income.
Anonymous donations get taxed
Donations without donor details beyond the higher of ₹1 lakh or 5% of total donations are taxable (section 115BBC of the 1961 Act; section 337 of the 2025 Act).
Late donor statements cost money
A late Form 10BD attracts ₹200 a day under section 234G and a penalty of ₹10,000 to ₹1 lakh under section 271K. Donors also lose their deduction.
Frequently asked questions
Which books must a registered trust or NGO keep?
A registered trust or NGO must keep a cash book, ledger and journal, copies of receipts issued, original bills for payments, and records of projects, income, application, corpus, loans, investments and dealings with specified persons. These come from Rule 17AA, notified by CBDT Notification No. 94/2022 and applicable from AY 2023-24. The records can be electronic. We set them up in a simple structure, so they are ready whenever the auditor or department asks.
How long must NGO accounting records be kept?
NGO books and documents under Rule 17AA must be kept for 10 years from the end of the relevant assessment year. So records for FY 2025-26, which is AY 2026-27, are kept until 31 March 2037. They stay at the registered office unless the management passes a resolution to keep them elsewhere in India and informs the Assessing Officer. We keep a digital copy organised year by year, so nothing goes missing when office bearers change.
Do FCRA funds need separate books?
Yes, section 19 of the FCRA, 2010 requires an account of foreign contribution received and a record of how it was used. Foreign money is received only in the FCRA account at SBI, New Delhi Main Branch, and cannot be mixed with local funds. Administrative expenses are capped at 20% of foreign contribution received in a year. We keep a separate FCRA ledger that ties directly to your FC-4 return, so the numbers always agree.
What is the difference between corpus and general donations?
A corpus donation comes with a written direction that it will form part of the corpus, the NGO’s permanent fund. A general donation can be spent on day-to-day activities. Corpus donations are recorded separately and invested in permitted modes, and Rule 17AA requires records of corpus received. Without the donor’s written direction, a gift is treated as general income. We keep the direction letters on file, so each corpus entry is backed by paper.
What is the 85% rule for NGOs?
An NGO must apply at least 85% of its income to its charitable objects during the year to keep that income tax-free. The remaining 15% can be set apart without conditions. A shortfall can be covered by Form 9A for income not received, or by Form 10 for accumulation up to five years, filed before the return due date. We track the percentage every quarter, so you know where you stand before the year closes.
Can our NGO keep its accounts in Tally or other software?
Yes, Rule 17AA allows books in written, electronic or digital form, so Tally or any other accounting software is fine. The software just needs to show fund-wise and project-wise figures and keep a full audit trail. Paper vouchers should still be filed or scanned. We work in the software you already use, or set one up if you are starting fresh, and train your staff on the entries.
Are anonymous donations a problem?
Anonymous donations are taxable beyond the higher of ₹1 lakh or 5% of total donations received in the year. Under section 115BBC of the 1961 Act, and section 337 of the 2025 Act, a donation without the donor’s identity recorded counts as anonymous. A donation box at a temple or community event is the usual source. We record name, address and PAN wherever possible, so very little falls into the anonymous bucket.
Do you also handle the NGO’s audit?
Yes, our chartered accountants can carry out the income-tax audit in Form 10B or 10BB once the books are closed. For FY 2025-26 the report is due by 21 October 2026, ahead of ITR-7 by 21 November 2026. Where the law or your funders need an independent auditor, we prepare the statements and schedules and hand them over. Either way, the audit starts from reconciled books.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
Ready to begin?
Share last year’s accounts and this year’s bank statements, and we will tell you exactly what your books need.