NGO Audit Requirements

Audit is one of the most misunderstood compliance obligations for Indian non-profit organisations. The confusion is understandable: there is no single "NGO audit" in Indian law. Instead, there are three separate audits that an organisation may face, each governed by a different statute, each with its own form, due date, and trigger conditions. Whether your organisation needs to be audited — and which audits apply — depends on your legal structure, your income, and whether you receive foreign funds.

This guide explains when an audit is required, the three central audits in detail, the new Form 112 introduced under the Income Tax Act 2025, the legacy Form 10B and Form 10BB, FCRA and Section 8 company audit requirements, state-level obligations, and the penalties for getting it wrong.

When is an audit required?

The first question most founders ask is simply: does my NGO need to be audited? The honest answer is that it depends on three factors — your entity type, your income, and whether you receive foreign contribution. A useful decision framework is:

• If you are a Section 8 company: a company audit under the Companies Act, 2013 is mandatory every year, regardless of income. There is no income threshold.
• If you are an RNPO (Registered Non-Profit Organisation, formerly a 12A/80G registered entity) and your total income, before RNPO exemptions, exceeds the basic exemption limit in a tax year: an income tax audit is required.
• If you receive or hold foreign contribution: an FCRA audit is required, even if the amount received in a given year is Rs 0.
• If you are a trust or society: you may also face state-level audit and return requirements under your state Trust Act or the Societies Registration Act, separate from the three central audits above.

An organisation can be subject to more than one of these audits simultaneously. A Section 8 company that holds 12A registration and receives foreign contribution, for example, must undergo all three — the company audit, the income tax audit, and the FCRA audit — each year.

The three types of NGO audits

The table below summarises the three central audits. Each is governed by a different law and has a distinct trigger, form, and due date.

Form 112 — the new unified audit report

The most significant recent change to NGO audit compliance is the introduction of Form 112 under Section 348 of the Income Tax Act 2025. Form 112 replaces both Form 10B and Form 10BB from the 2025-26 tax year onward, effective April 1, 2026. Over 2.25 lakh audit forms are filed annually, and the consolidation into a single form is intended to simplify the filing landscape while still allowing risk-based differentiation.

Form 112 is a unified audit report structured into Part-A, Part-B, schedules, a chartered accountant verification, and notes. The form adapts to the size and complexity of the filing organisation:

• Smaller RNPOs — those with regular income up to Rs 5 crore, no foreign contribution received, and no income applied overseas — get simplified reporting within the same form.
• Larger RNPOs — those that exceed the Rs 5 crore threshold, receive foreign contribution, or apply income outside India — face more detailed disclosures across the schedules.

The due date for Form 112 is on or before September 30 of the year following the tax year. The audit must be conducted by a chartered accountant as defined under Section 288 of the Income Tax Act, and the report must be furnished electronically or digitally. For RNPOs, the audit is a condition for claiming exemption under Sections 11 and 12 of the Income Tax Act — without a valid audit report, the exemption is denied.

Form 10B vs Form 10BB — for FY 2025-26 and earlier

For financial years up to FY 2025-26 (assessment year 2026-27), the audit report was filed as either Form 10B or Form 10BB, depending on the organisation's circumstances. The two forms were not interchangeable — each applied to a defined set of conditions:

• Form 10B applied in higher-risk or higher-complexity situations, including where the organisation's total income exceeded Rs 5 crore, where it received foreign contributions, or where income was applied outside India.
• Form 10BB applied in all other cases — typically smaller trusts and societies that did not meet any of the Form 10B triggers.

From the 2025-26 tax year onward, both forms are replaced by the unified Form 112. Organisations filing audit reports for earlier assessment years should continue to use the form that was applicable for that year, as the change is not retrospective.

FCRA audit requirements

The FCRA audit is governed by the Foreign Contribution (Regulation) Act, 2010 and the 2020 Amendment. It applies to any organisation that receives or holds foreign contribution — and crucially, the obligation applies even if the amount of foreign contribution received in a given financial year is Rs 0. Holding an FCRA registration or prior permission is enough to trigger the annual return requirement.

The annual return is filed as Form FC-4, due by December 31 following the financial year. The return must include audited accounts, which means the organisation's FCRA receipts and expenditure must be separately audited. The audit also covers the designated FCRA bank account — the "FCRA account" opened with a specified bank through which all foreign contribution must be received. The 2020 Amendment made it mandatory to route all foreign contribution through this single designated account, and the audit verifies that this requirement has been met.

Form FC-4 is filed on the FCRA online portal. The audited accounts must be prepared in the format prescribed under the FCRA rules and must reconcile the foreign contribution received, utilised, and unutilised during the year.

Section 8 company audit

A Section 8 company — a non-profit company incorporated under the Companies Act, 2013 — must be audited every year, regardless of its income. There is no exemption for small Section 8 companies. The audit is conducted in accordance with the Companies Act and the applicable accounting standards, and the audited financial statements are then filed with the Registrar of Companies (RoC).

The filing is made through Form AOC-4, which must be submitted within 30 days of the annual general meeting (AGM). The AOC-4 filing includes the balance sheet, profit and loss account, and the auditor's report. This is a separate compliance from the income tax audit — a Section 8 company that also holds 12A registration and exceeds the income threshold must undergo both the company audit and the income tax audit, and file both AOC-4 and Form 112.

Filings are made through the Ministry of Corporate Affairs portal.

State-level audit requirements

Beyond the three central audits, trusts and societies may also face state-level audit and return requirements. These arise under the relevant state Trust Act (for trusts) or the Societies Registration Act (for societies), and they vary by state. Some states require an annual audit and the filing of an annual return with the Registrar of Societies or the Charity Commissioner; others impose audit thresholds based on income or expenditure.

These state-level requirements are separate from the income tax audit, the company audit, and the FCRA audit. An organisation must comply with both the central and the state-level obligations where they apply. Because the rules differ from state to state, organisations should check the specific requirements in the state where they are registered — the threshold, the form, and the due date can all differ.

Who can conduct the audit?

For income tax audits, the audit must be conducted by a chartered accountant as defined under Section 288 of the Income Tax Act. The CA must be independent of the organisation — a trustee, director, or office bearer cannot audit their own organisation. The auditor verifies the accounts, the application of income toward charitable purposes, and the specific disclosures required under the relevant form (Form 112, or Form 10B/10BB for earlier years).

The audit report must be furnished electronically or digitally — it is filed through the Income Tax e-Filing portal by the CA, who must be registered on the portal. For Section 8 company audits, the auditor must be a practicing chartered accountant qualified to conduct a company audit under the Companies Act. For FCRA audits, the accounts must be audited by a chartered accountant and submitted along with Form FC-4.

Common mistakes and edge cases

Audit compliance is an area where small errors can have outsized consequences. The following mistakes recur frequently:

• Assuming no audit is needed because income is small: A Section 8 company must be audited regardless of income, and an FCRA-registered entity must file Form FC-4 even with zero foreign contribution. Income thresholds only apply to the income tax audit for RNPOs.
• Using the wrong form for the wrong year: Filing Form 112 for an assessment year that predates the new regime, or filing Form 10B/10BB for a year that falls under Form 112, can lead to rejection of the report.
• Missing the September 30 deadline for Form 112: Late filing attracts a daily fee and can jeopardise the Section 11/12 exemption for the year.
• Not auditing the FCRA designated bank account separately: The FCRA audit must cover the designated account; commingling FCRA and domestic funds in the audit can lead to FCRA violations.
• Overlooking state-level requirements: Trusts and societies that comply with central audits but ignore state-level returns can face action from the state Registrar or Charity Commissioner.

Guardrails and important points

• The income tax audit is a condition for claiming exemption under Sections 11 and 12 — without it, the RNPO's income is taxable.
• Form 112 is a single form with adaptive complexity — smaller RNPOs get simplified reporting, but only if they meet all three conditions (income up to Rs 5 crore, no foreign contribution, no income applied overseas).
• The FCRA audit applies to any entity that receives or holds foreign contribution — the Rs 0 case is not exempt.
• The audit report must be furnished electronically or digitally; paper filings are not accepted.
• The auditor must be a chartered accountant under Section 288 and must be independent of the organisation.
• State-level requirements for trusts and societies are separate from the three central audits and vary by state.

Penalties for non-compliance

Failing to meet audit requirements carries real consequences under each of the three laws:

• Income tax audit (Form 112 / 10B / 10BB): Late filing of the audit report attracts a fee of Rs 200 per day under Section 234G for each day of delay. More seriously, without a valid audit report the RNPO loses its exemption under Sections 11 and 12, and its income becomes taxable.
• Section 8 company audit (AOC-4): Failure to file AOC-4 within 30 days of the AGM attracts penalties under the Companies Act, 2013, including fines on the company and its officers. Continued non-filing can lead to the company being struck off the register.
• FCRA audit (Form FC-4): Failure to file the annual return can lead to suspension or cancellation of FCRA registration, freezing of the FCRA bank account, and forfeiture of foreign contribution. The 2020 Amendment tightened enforcement significantly.
• State-level requirements: Non-compliance with state Trust Act or Societies Registration Act requirements can lead to action by the state Registrar or Charity Commissioner, including fines and, in serious cases, cancellation of the state registration.