The charitable institutions or associations are entitled to certain tax exemptions and benefits in India. The benefits & exemptions are dealt with under Section 12AA/12A and 80G of the IT Act, 1961. However, to avail such benefits and tax exemptions under Section 12A and 80G had to revalidate their registrations. The present NGOs or charitable institutions had to apply again to the Income Tax Authorities for Revalidation of 80G and 12A. The institutions cannot claim the benefits provided to them under 80G and 12A deductions without the Revalidation of 80G and 12A. The process of Revalidation of 80G and 12A focuses on whether the charitable activities of the Trust or NGO, or institution are genuine or not.
The Revalidation of 80G and 12A is vital due to the changes made by way of amendment to the Finance Act, 2020, which dictates that the charitable institutions registered under Section 12A/12AA and/or 80G of the IT Act, 1961 are required to re-apply for registration. The IT (6th Amendment) Rules, 2021, came into force on 1st April, 2021. Scroll down to check more information regarding the Revalidation of 80G and 12A.
Section 12A and Section 80G of the IT Act, 1961
- Section 80G: Registration of Trust or any charitable institutions under Section 80G doesn’t facilitate any direct benefits to them. The charitable institutions or Trusts register themselves under Section 80G to permit the donors who contribute to them to avail some tax benefits on their contributions. The Registration under Section 80G of charitable institutions or NGOs is to incentivize their donors to make contributions. But, only the NGOs that have registered under both Section 80G & 12A are eligible for getting Government funding.
- Section 12A: Registration of such institutions or trusts under Section 12A or 12AA certifies that the IT authorities identify the registered institution or Trust as having been established for a charitable purpose. The effect of such recognition is that the respective institutions are exempted from paying Income Tax, subject to the fulfilment of certain other compliance necessities as per Law.
Section 12A deals with institutions & trusts incorporated before 1996, and Section 12AA deals with Trust & charitable institutions registered after 1996. The NGOs have to get a 12A Certification to get tax benefits, regardless of whether they are constituted as a Trust, Society, or not-to-profit company.
Revalidation of 80G and 12A Registration for an NGO
If you are an NGO, the Trust or Section 8 Company is availing some benefits of registering under Section 80G and 12A Deduction, Revalidation of 80G and 12A is necessary. You have to apply to the IT authorities for the Revalidation of your existing 12A and 80G Registration. Without this Revalidation, you will not be able to avail the benefits of the 12A Certificate for NGO and 80G Deduction.
The Revalidation of 80G and 12A is required due to the recent amendment brought in by the Finance Act, 2020. It has proposed a new regime for Trust, institutions, hospitals, universities, universities, other medical institutions, etc. The Act has mandated all charitable institutions, already registered under Section 12A/12 AA and/or 80G of the IT Act, to re-apply the existing registration under the revised provisions.
Features of Revalidation of 80G and 12A Registration
Following are some vital features of Revalidation of 80G and 12A:
- No Need for Detailed Enquiry: According to the amended provisions, entities already registered to Section 12A and 80G need to simply apply for the Revalidation of 80G and 12A. Further, they may not have to go vial detailed enquiries by the CIT or PCIT. On receipt of the application for Revalidation, the PCIT or CIT is supposed to pass the registration order. The enquiry will be applicable only if:
- After the expiration of the registration validity of 5 years;
- Conversion of the provisional registration or approval into final or full registration/approval.
- Applicable for Institutions Covered under Section 12 AA: Section 12 A deals with charitable trusts or institutions with registration before 1996, and Section 12 AA deals with charitable institutions registered after 1996. Furthermore, the new provisions of Revalidation of 80G and 12A Registration are applicable for NGOs covered under Section 12 AA as well.
- Order Need Three Months to Pass: The PCIT or CIT will need to pass an approval (or rejection) order of NGO Registration within three months.
- Application will be checked for correctness: Even though there will not be any questions, the applications will have concern for their correctness & completeness. Moreover, the authority will check if the Trust Deeds, Registration Certificates, donor lists, by-laws, and member lists are valid and are in the correct format.
Documents Required for Revalidation of 80G and 12A
Following are some vital documents required for Revalidation of 80G and 12A:
- Self-certified copy of the registration under the FCRA, 2010, if the applicant or candidate is registered under the respective Act;
- Copy of the existing order of registration under Section 12A, 12AA, or 12AB, as the case may be;
- Copy of the documents showing or evidencing modification or adoption of the objects;
- The details of NGO DARPAN Registration, in case the organisation is registered on the portal of DARPAN;
- Copy of incorporation of Societies or Trust;
- Copy of the registration with the ROC (Registrar of Companies) or Registrar of Firms or Registrar of Societies or Registrar of Public Trusts, as the case may be;
- Copies of the annual accounts for a time period nor exceeding 3 years immediately prior to the year in which Revalidation application is made, in the case of existing entities;
- Where the income of the organisation comprises the profits & gains of business or whereas business undertaking is held by the company under the provisions of Section 11(4A), copies of the annual accounts and audit report under Section 44AB for 3 years immediately prior to the year in which the application is made;
- Notes on the institution or trust’s activities.
Procedure for Revalidation of 80G and 12A under Section 12A and 80G
To claim exemption, an NGO, a charitable or religious trust, should make an application to the Principal Commissioner of Income Tax/Commissioner of Income Tax online in Form-10A. Following is the procedure for Revalidation of 80G and 12A under Section 12A and 80G:
- First, you have to log in to the online website of the IT Department;
- Then, you have to go to the Income Tax Forms under the tab or e-file;
- Choose the Form Name as Form 10A and select the relevant Assessment Year from the drop-down list;
- Select the Prepare & Submit Online option in the submission mode;
- Fill in all the information or details required in the form and attach the applicable attachments;
- Submit the form using Electronic Verification Code or DSC as required at the time of filing the return.
The NGOs applying for Revalidation or Registration as per the amended provision of Section 80G are compulsorily required to provide the details of their Registration Number with the DARPAN portal of Niti Aayog. The registration under Section 80G and 12A are also compulsory when the organisations intend to receive or receive any assistance or grant from the State Government or Central Government.
Read our Article:How to Get 80g Registration for Trust?