Apply Online for 12A and 80G Registration

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In India, non-profit organisations can benefit significantly from two specific registrations provided by the Income Tax Department: 12A and 80G. The 12A registration grants non-profit organizations an exemption from paying income tax on their earned income, which can greatly aid in maximising the funds available for their charitable activities. Additionally, the 80G registration offers a substantial benefit to the donors of these organisations, allowing them to claim deductions on their taxable income for any donations made. So, the 12A and 80G registration process online must be done by the non-profit organisations to avail tax deduction benefits.

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What is 12A and 80g Registration?

12A and 80G registrations are critical tax provisions for NGOs in India, enabling charitable institutions to avail themselves of specific tax exemptions and benefits. These exemptions are governed by Sections 12A/12AA and 80G of the Income Tax Act of 1961:

12A Registration

This certification is provided under the Income Tax Act 1961 to non-profit organisations in India. Once registered under Section 12A, an NGO becomes eligible for tax exemption on its income, meaning it doesn’t have to pay tax on surplus funds generated through grants, donations, or other revenue as long as these funds are used for charitable purposes. This registration is crucial for NGOs as it helps in maximising the funds available for their activities.

80G Registration

While 12A registration benefits the NGO, 80G registration is intended to incentivise donors. It allows individuals or entities who donate to a 12A-registered NGO to claim a deduction on their income tax. This deduction is a percentage of the amount donated and can significantly reduce the donor’s taxable income. The purpose of this provision is to encourage more donations by providing financial benefits to donors.

The key difference between 12A and 80G is that 12A registration provides tax exemption on an NGO’s income, while 80G registration allows donors to avail tax deductions on their donations. Both registrations enhance NGOs’ ability to attract contributions by offering fiscal advantages to both the organisations and their benefactors. So, it is useful to register and obtain the 12A 80G certificate.

Who can apply for 12A and 80G registration?

The following types of organisations are eligible to apply for 12A 80G registration,

Charitable Trusts: Organizations established for charitable purposes.
Registered Societies: Societies that are formally registered under the Societies Registration Act or similar state laws.
Section 8 Companies: Companies formed under Section 8 of the Companies Act 2013 specifically for promoting charitable activities.
Religious Organizations: Groups that primarily focus on religious activities and charitable work.
Educational Institutions: Non-profit schools, colleges, and educational foundations.
Medical Institutions: Non-profit hospitals and medical research organisations

Eligibility Criteria for 12A 80G Registration

To be eligible for Section 12A/80g registration, organisations need to meet specific requirements set by the Income Tax Department:

12A Registration Eligibility Criteria

This section pertains to registering charitable or religious NGOs, enabling them to enjoy tax exemptions on income derived from donations. To qualify for Section 12A registration, an organisation must meet the following criteria:

Nature of the Organization: Applicable to trusts, societies, or Section 8 companies that are established solely for charitable or religious purposes as defined under Section 2(15) of the Income Tax Act. This includes activities like poverty relief, education, medical relief, environmental preservation, and more.
Charitable Activities: The organization must actively engage in its stated philanthropic objectives without any profit motives benefiting specific individuals or groups.
Registration Proof: Must be duly registered as a trust, a society, or a Section 8 company under the relevant laws, with proof required during the application process.
Income Utilization: All income and assets must be exclusively used for charitable or religious purposes, without any direct or indirect benefit to members or specific individuals.
Financial Documentation: Proper bookkeeping and documentation must be maintained to reflect accurate financial operations.
Tax Compliance: Annual tax returns must be filed on time, even with exempt status, to maintain this exemption.
Political Neutrality: The organisation should not participate in or support political activities, as this can result in the revocation of the 12A status.

80G Registration Eligibility Criteria

This allows donors to claim tax deductions on donations made to eligible non-profit organizations. Eligibility for Section 80G registration includes:

Nature of Organisation: Must be a non-profit operating as a registered trust, society, or Section 8 company focused on charitable or religious purposes, serving the public interest.
12A Registration Requirement: Organizations must already be exempt under Sections 11 and 12, evidenced by a 12A registration.
Restrictions on Usage of Income: The governing documents must strictly limit the use of funds to charitable purposes only.
Inclusivity of Beneficiaries: The benefits of the organization should not be restricted to any particular religious community or caste, ensuring a wider societal benefit.
Regular Accounting: Accurate and regular financial records must be kept to provide transparency and accountability.

Additional Notes:

Religious Trusts: 12A registration is suitable only for public religious trusts, not for those serving private religious functions.
Scope of Public Utility Activities: These should not involve commercial activities unless they support the organization’s charitable purpose, with such income not exceeding 20% of total receipts in the previous year.

Benefits of 12A and 80G Registrations

The benefits of obtaining 80G and 12A registrations for charitable organizations and NGOs are substantial, impacting various aspects of their operations:

Tax Exemptions for Donors: NGOs with 80G certification can offer their donors the advantage of tax deductions on their contributions. This makes donating more attractive and can lead to increased support.
Enhanced Credibility and Trust: Being registered under Section 12A and 80G lends an official stamp of approval from the Income Tax Department, enhancing an NGO’s credibility. This trust factor is crucial for donors and partners who seek transparency in operations.

Increased Fundraising Potential: The tax benefits associated with these registrations encourage both individuals and corporate entities to donate more generously. This broadens the potential fundraising base, allowing NGOs to expand their activities and reach.
Access to Government Grants: Many government programs and initiatives require NGOs to have 12A and 80G registrations to qualify for funding. This opens up numerous opportunities for grants that are critical for project financing and operations.
Long-Term Sustainability: The ability to offer tax benefits to donors not only boosts immediate donations but also helps in building long-term partnerships, ensuring sustainable funding sources. This stability allows NGOs to plan and execute impactful, long-term projects.
Efficient Utilization of Resources: With 12A registration, NGOs must maintain meticulous records and use their funds strictly for charitable purposes. This ensures that resources are used effectively and for the intended goals of the organisation.

Overall, 12A and 80G registrations not only help in managing and expanding financial resources through tax benefits but also play a vital role in building organizational reputation and operational capacity.

Validity of 12A and 80G Registration

The validity of 12A and 80G registrations depends on the type of registration obtained. There is no annual renewal requirement; however, registrations must be renewed periodically. Provisional registration is granted for a period of 3 years, while the validity of regular registration is for 5 years. The renewal process must be initiated at least 6 months before the expiry of the current registration. For example, if the validity is up to 31st March 2025, the renewal application should be submitted on or before 30th September 2024 to ensure continuous compliance.

12A and 80G Registration Documents Required

For NGOs to successfully complete the online registration process for 12A and 80G, they must provide a comprehensive set of documents required for 12A and 80G registration that verify their legal registration. Failure to provide these documents could result in the application being considered incomplete and subsequently rejected by the authorities. Below is a detailed list of documents required for 12A and 80G registrations in India.

Here’s the list covers the 12A and 80G registration documents required:

Trust Deed/Society Registration Certificate/Section 8 Company Certificate
Memorandum of Association and Articles of Association (for Section 8 companies only)
PAN card of the organization
Bank account statement of the organization
Audited accounts of the organization for the last three years
List of trustees/members/directors of the organization
List of activities carried out by the organization

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