80G and 12A Registration

NGOs must apply for 12A & 80G Certificate to provide income tax exemption to the donors! It also helps NGOs in availing government funding.

  • Drafting of application for 12A & 80G exemption certificate
  • Submission of application with the Income Tax authority
  • End to end coordination with the authority
  • Approval from the authority

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Applicability of 80G and 12A Registrations

80G and 12A registrations apply only to NGOs and Charitable Organizations if they fulfill the following conditions;

  • They must not have any income generated from a business
  • They should either be a charitable trust or a registered society
  • Also, such organizations should not be using their assets or income for any other purpose other than making charity
  • Furthermore, they must maintain a regular book of accounts in favor of their receipts and expenses.
  • The trustees or any other body governing the organization should not be involved in deriving any undue benefits from these funds
  • They should not be working for the benefit of any particular caste or religion
  • Also, in the case of business-related income, the organization should maintain a separate book of accounts. However, the donations received by the NGO must not be used for such businesses.

An NGO must apply for 12A and 80G Registration immediately after its incorporation.

What is an 80G Certificate?

An 80G Certificate is issued by the Income Tax Department to a non-governmental organization (NGO) such as a charitable trust, or a Section 8 Company. The 80G Certificate is granted to encourage the donors to donate funds into such non- profit organizations. Furthermore, the donor gets a tax exemption of 50% when they make donations to such organization, as they become eligible to deduct such amount from their Gross Total Income. Additionally, in order to avail the exemption, the donor needs to attach the stamped receipt of the donation made. Such a receipt must contain the donor’s name, date of donation, and PAN of the organization.

What is the procedure for 80G Registration

80G Registration procedure consists of the following steps:

  • Apply for an 80G certificate to the Commissioner of Income Tax (Exemption) within the jurisdictional area of the entity along with the required documents.
  • An on-premise inspection is done by the Income Tax department after the form, and the required documents for 80G registration are submitted
  • However, the Income Tax Officials might ask for additional documents or evidence if they seem fit, or if they feel anything to be missing
  • Upon satisfactory verification of documents and the office of the NGO, the 80G certificateis granted to the institution by the Commissioner.

Note: The Validity of an 80G Certificate is for a lifetime of the institution.

What are the Documents Required for the 80G Registration?

The following documents are required for 80G registration are as follows:

  • MoA and Registration certificate in case of Section 8 companies and Societies and a Trust Deed in case of a Trust
  • No objection certificate from the owner of the property where the registered office of the Institution is situated
  • Form 10G
  • A copy of the PAN of the NGO
  • Copy of Utility Bills such as Electricity bill, water bill or House Tax Receipt
  • A list of the donors along with their address and PAN
  • The documents related to Income Tax Returns and the Book of Accounts for the past three years
  • The list of the welfare activities being carried out & the progress report for the last three years
  • A detailed list of the Board of Trustees
  • Original RC, MoA, or Trust Deed.

About 12A Registration

Now that we have covered the 80G Registration process, we will know about Section 12A and how to get registered under Section 12A of the Income Tax Act, 1961.

Section 12 A of the Income Tax Act, 1961, is a onetime tax exemption provided to trusts, NGOs and Section 8 Companies. Such organizations holding a registration under section 12A are exempted from paying taxes on their surplus income.

Through 12A registration, Trusts, NGOs and Section 8 companies are exempted from paying income tax on their surplus income. NGOs are organizations involved in charitable and non-profit activities. However, they do earn income and they are required to pay tax as per normal rates if not registered under section 12A, Income Tax Act.

What is the Procedure for 12A Registration?

You are required to follow these steps for 12A registration;

  • You need to file an application in the Form 10A, as per Rule 17A of the Income Tax Act, 1961
  • The application needs to be filled as per the guidelines of the Jurisdictional Commissioner of Income Tax (Exemptions)
  • The Commissioner verifies the genuineness of the activities of the organization, Once he receives the Form and the documents. Also, He can call for additional documents or information if he considers necessary
  • On the satisfactory report, the Commissioner passes an order in writing for the grant of 12A Registration. If the Commissioner is not satisfied he will reject the application, after which the applicant is provided a fair chance to be heard.

12A Registration can be canceled at any point of time subject to the proof that the activities of the organization

  • Is against the object of the institution
  • Are not genuine
  • Is benefitting a specific religion or caste
  • The funds are being invested in prohibited means
  • The income of the institution is used for the benefit of specific individual or group of persons

Note: The12A Registration is valid for a lifetime of such institution

What are the Documents Required for 12A Registration?

The following documents are required for 12A registration;

  • Documental evidence of the creation of the Trust or NGO {Trust Deed of a Trust; Registration Certificate and Memorandum of Association {MOA} of a society}
  • Section 8 companies need to submit a certificate of incorporation and copies of MoA and AoA of the company
  • Form 10A.
  • Three-year bank account statement of the Trust.
  • PAN of the organization.

 

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