The word NGO is an abbreviation of Non Government Organisation. Any organisation working for a social, cultural, economic, educational or religious cause is termed as NGO.

An NGO can be formed under various legal forms:

1. Trust (Formed under a Trust deed and registered with Income Tax Authority.)
2. Society registered under Societies Registration Act.
3. Limited company incorporated under section 25 of The Companies Act.

NGOs can undertake any lawful activity allowed under their Charter or Memorandum of Association.

Any NGO accepting foreign contribution should register itself with the Central Government. It has to intimate the Central Government of the amount of each foreign contribution received by it, the source from which and the manner in which such foreign contribution was received and the purposes for which and the manner in which such foreign contribution was utilised by it. Any association which is not registered with the Central Government shall accept any foreign contribution only after obtaining the prior permission from the Central Government and should also give intimation to the Central Government as the registered association does.

Foreign contribution signifies donation, delivery or transfer made by any foreign source of any article or currency or foreign securities as defined under FERA. Foreign sources includes the following : -

(i) the Government of any foreign country or its agency ,
(ii) any international agency other than the agency specified by the Central Govt.
(iii) a foreign company as specified in section 591 of the Companies Act including a subsidiary of a foreign company.
(iv) a corporation incorporated in a foreign country or territory,
(v) a multi-national corporation within the meaning of this Act,
(vi) An Indian company controlled by a foreign government, citizens of a foreign country, corporation incorporated in foreign country, Trusts, society body of individuals incorporated in a foreign country.
(vii) a trade union in any foreign country or territory, whether or not registered
(viii) a foreign trust or foundation
(ix) a society, club or other association of individuals formed or registered outside India,
(x) a citizen of a foreign country,

Yes, income received by any religious or charitable trust, any other fund or institution established for religious or social purpose is not taxable provided the income is applied for the objects of the organisation.
However, to get exemption under Income Tax, it is essential for NGOs to register themselves with Income Tax Authorities. Income Tax Benefits to Donors
People donating to these religious and charitable organisations also get an exemption of the amount of donation. The amount donated is either 100 percent or 50 percent exempt. The percentage of exemption differs for different organisations and is specified by authorities.

Yes, there are certain restrictions on acceptance of foreign contributions :

1. Any political party whether on its own or through its officers or representatives cannot accept any foreign contribution. Similarly, any citizen or resident of India shall neither accept nor deliver any currency which is accepted from any foreign source, to any political party directly or indirectly.

2. Organisations of political nature cannot accept any foreign contribution without prior permission of the government. Similarly, a resident or citizen of India shall neither accept nor deliver any currency for a political organisation.

3. Any person receiving any currency from a foreign source on behalf of any association, shall deliver such currency only to the organisation or its representative for which it was received.

4. Any candidate for election, who had received any foreign contribution within 182 days preceding the date on which he is duly nominated as candidate should give an intimation to the Central Government stating the amount of foreign contribution received the source from which and the manner in which such foreign contribution was received and the purposes for which, and the manner in which, such foreign contribution was utilised by him.