12A & 80G Registration

Preparing for Changes in 12A and 80G Regulations

calendar16 Mar, 2024
timeReading Time: 4 Minutes
Changes in 12A and 80G

For trusts and other not-for-profit organizations, the Income Tax Department offers a one-time registration known as a 12A registration. The registration is done in order to avoid having to pay income tax. 12A registration is available as soon as the company is incorporated. Under sections 11 and 12 of the Income Tax Act, Section 8 companies, trusts, societies, and non-governmental organizations (NGOs) that have gained 12A registration are free from paying income tax on their surplus revenue.

What is 80G Certification?

There are no immediate benefits for trust or charity entities that register under Section 80G. In order to provide contributors with specific tax benefits on their donations, trusts and charitable institutions must register under Section 80G. The purpose of a charity institution’s section 80G registration is to encourage donations from its supporters.

An 80G certificate exempts the donor from paying taxes and contributions made to section 8 companies, charitable trusts, or organizations recognized as tax-exempt. By enabling contributors to deduct donations to qualified organizations from their taxable income, the 80G certificate seeks to promote generosity.

Why get 12A and 80G registration?

Getting both 12A and 80G registrations is essential for non-profits in India if they want to function well and draw in funding. The Income Tax Act of 1961’s 12A registration is important because it spares section 8 companies, non-profit organizations, and charitable or religious trusts from paying income tax on their profits. This exemption promotes financial sustainability by enabling the organization to use its income for charitable purposes free from the weight of income tax payments.

At the same time, donations to qualified charity organizations are encouraged under the Income Tax Act’s 80G registration. This dual registration approach fosters a mutually beneficial relationship: the 80G registration attracts outside funding by offering contributors tax advantages, while the 12A registration protects the non-profit’s finances by exempting its revenue. When taken as a whole, these registrations are essential to create an atmosphere that is conducive to successful fundraising and operations for charity organizations operating in India.

Why are changes in 12A and 80G important?

Changes are very important in 12A and 80G registration. The operating, fundraising, and general viability of non-profit organizations are directly impacted by changes in 12A and 80G registrations, making them significant. These modifications may have an impact on the relationships that donors, charity organizations, and the regulatory landscape have. Over time, the legal and regulatory environment changes. Changes in 12A and 80G provisions could be necessary in response to changes in tax laws or regulations so that non-profit organizations can continue to take advantage of donor incentives and tax exemptions while remaining compliant.

It’s possible that changes in 12A and 80G registration procedures can increase accountability and openness in non-profit organizations. In order to guarantee that these organizations function honestly and efficiently in allocating the funds for their declared charity goals, stricter requirements or reporting guidelines can be implemented. The changes in 12A and 80G can enable non-profits to take on new tasks as social needs and priorities shift. Organizations tackling pertinent and urgent causes can receive more funding if their registrations are in line with contemporary societal challenges.

Difference between pre and post-changes in 12A and 80G

Changes in 12A and 80Gare required if you are an NGO, a Section 8 business, or a charitable trust and you are making use of the advantages of registration under sections 12 A and 80G deductions. You will have to reapply to the Income Tax authorities in order to have your current 12A and 80G registrations validated. You won’t be able to make use of the current 12A certificate for NGO and 80G deduction benefits without revalidation.

The Finance Act, 2020 brought forth a recent revision that makes this revalidation necessary. A new system has been suggested for organizations, including hospitals, universities, charity and religious trusts, other medical facilities, and educational establishments.

The changes in 12A and 80G that took place are as follows:

  • One of the first changes in 12A and 80G is by June 30, 2021, at the latest, all NGOs that are currently registered under Sections 12A, 12AA, 80G, and 10(23C) must revalidate their registration using Form 10A.
  • The next changes in 12A and 80G are that Form 10A must be used to submit a new application for provisional registration under Section 12AB/80G/10(23C) no later than one month before the start of the preceding year that corresponds with the assessment year for which the registration is being requested.
  • When an NGO under Section 12AB becomes registered or provisionally registered, and its registration is about to expire, it must apply for re-registration or registration in Form 10AB at least six months before the registration or provisional registration expires or within six months of the NGO starting its operations, whichever comes first, is the next change in 12A and 80G regulations.
  • One of the other changes in 12A and 80G is when a non-profit organization whose registration has been rendered inactive by the first proviso of Section 11 (7) must be brought back into operation under Section 10(23C)/10(46) by completing Form 10AB at least six months before the assessment year in question begins.
  • The next change in 12A and 80G is re-registration for amendment of objects for entities registered under Section 12AB in Form No. 10AB must be applied within 30 days of the date of such modification if the NGO’s modified objects no longer align with the criteria of registration.

12A and 80G Registration Services with Corpbiz

Our company specializes in simplifying and obtaining the 12A and 80G registration procedures for NGOs or Trusts more quickly. Among the services we provide are Form 10A/10AB applications, re-registration, provisional registration, help with renewals, and trust-based 12A and 80G registration certificates. Our team of specialists is well-versed in Section 12A registration as well as Section 80G registrations. Get in touch with us for quick and easy help with your registration needs, so your team can concentrate on its crucial altruistic work.

Frequently Asked Questions

  1. Is 12A registration mandatory?

    All NGOs must register under section 12A of the Income Tax Act, 1961 in order to be eligible for exemptions under sections 11 and 12.

  2. Why is an 80G registration necessary?

    NGOs get an 80G registration in order to allow their contributors to deduct their contributions from their taxes. Encouragement of increasing NGO donations is the goal of 80G registration.

  3. Is it possible for an NGO to get 80G and 12A registrations simultaneously?

    No, the relevant institution can only seek the 80G registration subsequent to obtaining the 12A registration.

  4. For what duration is 80G valid?

    Five years after the date of revalidation, the certificate less than 80G is still valid.

  5. How can I get my 80G and 12A renewed?

    The income tax department's website has online methods for applying for the renewal of 12A and 80G.

  6. Who can apply for the 80G registration?

    An application for an 80G registration may be submitted by any trust, non-governmental organization, non-profit organization, or section 8 corporation.

  7. What makes 12A and 80G different from one another?

    While 80G Registration, which comes under section 80G of the Income Tax Act benefits an NGO's donor, 12A Registration helps an NGO have its organizational revenue free from tax.

  8. What is the new registration procedure under Sections 12A and 80G?

    Section 12AB of the Income Tax Act has altered the procedures for 12A and 80G registrations. Every NGO that is currently registered under Sections 12A and 80G of the Act must re-register under Section 12AB in Form 10A in accordance with the revised procedure. Form 10A has superseded Form 10 and Form 10G as the replacement form for 12A and 80G registrations.

  9. How can my 12A certificate be renewed?

    Gather the necessary paperwork, including updated financial accounts and compliance reports, in order to renew your 12A accreditation. Within the allotted period, submit the renewal application to the appropriate tax authorities.

  10. How much tax is not subject to 80G?

    Fifty per cent of your gifts to the funds or organizations are allowed under Section 80G.

Read Our Article: Common NGO Registration Mistakes

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