12A and 80G Registration

About 12A and 80G Registration

12A & 80G Registration

Welcome to A2Z FINEDGE, your trusted partner for taxation compliance and filing services. Our team of experts, including Chartered Accountants (CAs), Company Secretaries (CS), MBAs, Lawyers, and Advocates, is dedicated to assisting non-profit organizations in obtaining 12A and 80G registrations. These registrations are essential for NGOs, trusts, and other non-profit entities seeking tax exemptions and donor benefits.

In India, Non-Governmental Organizations (NGOs), charitable trusts, and other entities engaged in social, religious, or educational activities can apply for 12A and 80G registrations to gain certain benefits under the Income Tax Act, 1961. These registrations provide tax exemptions to the NGOs and enable them to receive donations that are eligible for tax deductions for the donors.

What is 12A Registration?

12A registration under Section 12A of the Income Tax Act, 1961, is a crucial registration for NGOs and charitable organizations. It grants tax exemptions to the organization, meaning that the income generated by the registered NGO is not subject to income tax, provided it is used for charitable purposes.

What is 80G Registration?

80G registration under Section 80G of the Income Tax Act, 1961, allows donors who contribute to registered NGOs to claim a tax deduction on their donations. The 80G certification increases the attractiveness of the organization to potential donors, as they can deduct the donated amount from their taxable income.

Who Can Apply for 12A & 80G Registration?

• 12A Registration:

Any NGO, charitable trust, society, or section 8 company involved in the promotion of charity, education, medical relief, or the advancement of any other object of general public utility can apply for 12A registration.

• 80G Registration:

NGOs or charitable organizations that are already registered under 12A can apply for 80G registration. It is granted to those organizations that promote social causes like education, religion, medical relief, etc.

12A Registration Eligibility Criteria

1. Non-Profit Objective: The organization must have a non-profit objective and should not engage in activities for the benefit of any specific individual, community, or group.
2. Existing Entity: The NGO should be an existing registered trust, society, or section 8 company with proper legal documentation.
3. Regular Activities: The organization should be actively engaged in charitable or religious activities, and it must submit audited financial statements to demonstrate its financial health.
4. Legal Compliance: The organization must adhere to the regulations under the Income Tax Act, 1961, and submit all relevant documents during the registration process.

80G Registration Eligibility Criteria

1. 12A Registration: The NGO must be registered under 12A to apply for 80G registration.
2. Purpose of Activities: The organization must engage in charitable activities such as education, medical relief, poverty alleviation, environmental protection, and the promotion of art and culture.
3. Accountability and Transparency: The NGO must maintain transparent records, file annual returns, and comply with the provisions of the Income Tax Act.
4. Trust Deed or Memorandum: The organization must have a properly executed trust deed, memorandum of association, or articles of association that reflect its objectives.

Legal Provisions for 12A and 80G Registrations

1.       Section 12A of the Income Tax Act, 1961: Provides income tax exemption to NGOs, trusts, and non-profit entities.

2.      Section 80G of the Income Tax Act, 1961: Enables donors to claim tax deductions on donations made to registered NGOs.

3.      Income Tax Rules: Mandate the submission of Form 10A and Form 10G for 12A and 80G registrations, respectively.

Compliance with these provisions is critical for securing and retaining these registrations.

Benefits of 12A & 80G Registration

• 12A Registration:
• Tax Exemption: Income generated by the organization for charitable purposes is exempt from income tax.
• Enhanced Credibility: Registration under 12A enhances the credibility of the organization in the eyes of donors and regulatory authorities.
• Easier Funding: It helps the NGO in accessing government and international grants as it ensures the organization is recognized as a legitimate non-profit entity.
• 80G Registration:
• Tax Deduction for Donors: Donors can claim tax deductions for their contributions, making the NGO more attractive for donations.
• Increased Donations: With 80G certification, the organization can raise more funds, as individuals and corporations are incentivized to donate due to the tax benefit.
• Enhanced Trust: Donors are more likely to contribute to an organization that is registered under 80G because of the transparency and tax benefits involved.

Documents Required for 12A & 80G Registration

• Trust Deed or Memorandum of Association (MOA): This document specifies the objectives and rules of the organization.
• PAN Card of the Organization: A PAN card is required for legal identification and tax purposes.
• Audit Reports: The NGO must submit the audited financial statements of the past three years (if applicable).
• Registration Certificate: Proof of registration as a trust, society, or section 8 company.
• List of Governing Members: Details of the key members or trustees of the organization.
• Bank Account Details: A bank account in the name of the NGO is required.
• Documents of Activities: Proof of the activities carried out by the organization, such as brochures or reports.
• Income and Expenditure Statement: The financial details showing the income and expenses of the NGO.

Online Registration Process for 12A & 80G

1. Create an Account: Visit the official website of the Income Tax Department and create an account on the "Income Tax e-Filing" portal.
2. Fill the Application Form: For 12A registration, fill out Form 10A, and for 80G registration, fill out Form 10G. These forms require detailed information about the organization and its activities.
3. Upload Documents: Upload all required documents, including the trust deed, PAN card, and audited financials, as per the guidelines.
4. Submit the Application: After filling the forms and uploading documents, submit the application online. Ensure all information is accurate to avoid delays or rejections.
5. Acknowledgment: After submission, the application will be processed by the Income Tax Department. The department may ask for additional information if necessary. Upon successful approval, the organization will receive the 12A and/or 80G registration certificate.

Validity Period of Registration

• 12A Registration: Once granted, the 12A registration is valid for life, as long as the organization continues to fulfill the necessary requirements and remains compliant with the Income Tax Act.
• 80G Registration: The validity of 80G registration is typically 5 years, after which the NGO must apply for renewal. If an organization does not renew the registration, it will no longer be able to offer tax deductions for donations.

FAQs

 

1.      Who is eligible to apply for 12A Registration?

·         Any Non-Governmental Organization (NGO), charitable trust, society, or Section 8 company that is formed with the objective of promoting charitable or religious causes can apply for 12A registration. The organization must not operate for the benefit of any particular individual, community, or group.

 

2.     Who can apply for 80G Registration?

·         Only organizations that are already registered under 12A of the Income Tax Act can apply for 80G registration. These organizations must be involved in charitable or religious activities, such as promoting education, healthcare, poverty alleviation, environmental protection, and more.

 

3.     Is there any fee for 12A Registration?

·         No, there is no fee for obtaining 12A registration. The process is free of charge.

 

4.     Is there a fee for applying for 80G Registration?

·         No, there is no fee for applying for 80G registration. The process is free of charge.

 

5.     What is the validity of 12A Registration?

·         Once granted, 12A registration is typically valid for the lifetime of the organization, as long as it continues to comply with the provisions of the Income Tax Act. However, the organization must file annual returns and maintain proper documentation to maintain its status.

 

6.     What is the validity of 80G Registration?

·         80G registration is typically granted for a period of 5 years. After this period, the organization needs to apply for renewal. If the organization fails to renew the registration, it will no longer be able to offer tax deductions for donations.

 

7.      Can an organization lose its 12A status?

·         Yes, an organization can lose its 12A status if it fails to use its income for charitable purposes, does not comply with regulations, or misuses the tax exemptions. The Income Tax Department can revoke the registration if the NGO is found to be non-compliant.

 

8.     Can an organization lose its 80G status?

·         Yes, an organization can lose its 80G status if it violates the terms of its registration, such as using funds for non-charitable purposes, failing to maintain proper financial records, or not complying with the provisions of the Income Tax Act. The Income Tax Department can revoke the 80G registration if the organization is found non-compliant.

 

9.     Can an organization apply for 80G registration along with 12A?

·         Yes, organizations can apply for 80G registration after receiving 12A registration. 80G allows donors to claim tax deductions for donations made to the NGO. However, the organization must be registered under 12A before applying for 80G.

 

10.Can an organization apply for 12A Registration if it is newly established?

·         Yes, newly established organizations can apply for 12A registration, provided they have a proper legal structure, have a non-profit objective, and are involved in charitable activities. The application process may be faster if the organization has been active for a while, as it may need to show evidence of its activities.

 

11.   Is 12A Registration mandatory for all NGOs?

·         No, 12A registration is not mandatory for all NGOs. However, it is highly recommended for NGOs that wish to avail themselves of tax exemptions and demonstrate their credibility, especially when seeking donations or applying for grants.

 

12.  Is 80G Registration mandatory for an NGO?

·         No, 80G registration is not mandatory for all NGOs. However, it is highly beneficial, especially for organizations that rely on donations, as it provides donors with an incentive to contribute by offering tax benefits. It helps in increasing donor trust and funding for the organization.

 

13.  Can a foreign donor claim a deduction under 80G?

·         No, the deduction under Section 80G is applicable only to Indian taxpayers. Foreign donors are not eligible for a tax deduction on donations made to an Indian NGO under 80G.

 

14.Can an NGO issue 80G certificates for donations before receiving 80G registration?

·         No, an NGO cannot issue 80G certificates to donors unless it has received 80G registration from the Income Tax Department. Only registered organizations can provide valid 80G certificates for tax deductions.

 

 

Why Choose Filingscenter?

1.       Expert Team: Our team of CAs, CS, MBAs, and legal professionals ensures precise and error-free registration.

2.      Tailored Services: Customized solutions to meet the unique requirements of your NGO.

3.      End-to-End Assistance: Comprehensive support from eligibility assessment to post-registration compliance.

4.      Timely Execution: Prompt handling of your applications to avoid delays.

5.      Transparent Pricing: Affordable and clear pricing with no hidden charges.

Required Documents