80G & 12A Filing

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12A & 80G Registration for Non-Profit Firms

80G Registration

Non-governmental organisations (NGOs) - trust, society or Section 8 Company run on funds received through different sources of donations. All NGOs are eligible to apply for 80G certification. 80G registration falls under the purview of section 80G of the Income Tax Act of 1961. It benefits the donors in part or full by exempting them from paying taxes on their donations made to a registered NGO.

12A Registration

All non-governmental organisations (NGOs) are engaged in social endeavours through charity work. While they run their daily operations through donations, they do sometimes earn income as per the law. However, NGOs that are not registered under Section 12A of the Income Tax Act of 1961 have to pay taxes. However, NGOs with 12A registration are exempt from paying taxes on their income.

What are the Requirements for 80G and 12A Registration?

Having 80G and 12A registration certificates makes an NGO more appealing for the purpose of funding. The requirements for 80G and 12A Registration are:

  • Registration - Only registered NGOs are eligible for these registrations.
  • 12A Must - Only NGOs with a valid 12A registration can apply for 80G registration.
  • Income Clarity - NGOs should not have any revenue generation sourced from commercial activities.
  • Account Transparency - Maintaining account records with receipts and expenses is a must.

Who is Eligible for Tax Savings under 80G?

  • Eligible donations by individuals are entitled to tax exemption u/s 80 G.
  • Donations to only registered NGOs are entitled to tax exemption u/s 80G.

What are the Documents Required for 80G and 12A Registration?

12A Registration

The main objective of 12A registration is to attain an exception from income tax payment. Here is a checklist of documents required for 12A registration:

  • PAN Card copy of the NGO.
  • Trust Deed, if the applicant is a Trust.
  • List of the Board of Trustees.
  • Registration Certificate and MoA if the applicant is registered as a Society or Section 8 Company.
  • Form 10G if applying for registration under section 12A.
  • Address proof of the registered office.
  • No Objection Certificate (NoC) from a landowner in case the office is rented.
  • Utility bill copies Water Bill, Electricity Bill.
  • Books of account with the records of last three years of operations or since the date of establishment including income tax returns.
  • Report on Welfare Activities undertaken in the last three years.
  • Bank account statement for the last three years.
  • List of donors with their PAN and address details.

80G Registration

80G registration creates a route for donors to enjoy tax deduction benefits. Here is a checklist of documents required for 80G registration:

  • PAN Card copy of the NGO.
  • Form 10A if applying for registration under section 80G.
  • Bank account statement for the last three years.
  • MoA & AoA if the applicant is registered as a Section 8 Company under the Companies Act 2013.
  • Trust Deed if the applicant is a Trust.
  • Registration Certificate and MoA if the applicant is registered as a Society or Section 8 Company.

Once an organisation gets Section 12A registration, it lasts forever, with no need for renewal. The only way it ends is if the Income Tax Department cancels it. The organisation just needs to keep following the rules to maintain its registration.

Initially, provisional registration lasts for three years. After this period, renewal is required, and the renewed registration remains valid for five years. This cycle repeats every five years to continue enjoying the benefits.

    What Is the Procedure for 80G and 12A Registration?

    The 80G and 12A registration process is simple and free of complexities in any form with the right guidance. Given below is the stepwise guide for 12A registration-

    • Application to be filed in Form 10G in accordance with rule 17A of the Income Tax Act.
    • Attach the required documents along with the application.
    • Submit the application.
    • Submitted application is reviewed and the commissioner validates the authenticity of the NGO.
    • Submit any additional information and documents (if any) demanded by the officers.
    • Upon satisfactory validation of the documents and the NGO, officers’ issue 12A certificate.
    • The commissioner documents the refusal to grant 12A certificate in the report.
    • The applicant gets a fair chance to be heard in case their application gets rejected by the commissioner.

    In recent times, 80G and 12A registrations have grabbed the spotlight. Given below is the step-by-step guide for 80G Registration:

    • Application to be filed in Form 10A under the Income Tax Act.
    • Attach all required documents with the application.
    • Submit the application to the Income Tax Commissioner (Exemptions).
    • The submitted application is reviewed by the Income Tax Commissioner.
    • Furnish any additional documents and information (if any) demanded by the Income Tax officials.
    • 80G certificate is issued once the scrutiny and validation of the application, documents and the NGO’s registered office is successfully done by the officials.

    What are the Benefits of 80G and 12A Registration?

    80G and 12A registration are known for building credibility and ensuring trust. The significant benefits of 12A registration for NGOs are:

    • Income Tax Exemption – It exempts the NGOs from paying income tax on income received, helping them direct their funds to philanthropic causes.
    • Grants – It makes the NGOs eligible for receiving grants from the government as well as national and international donors.
    • One-Time Registration – It is a one-time registration process and needs no periodic renewal until the NGO remains functional.
    • Accruing Wealth – It facilitates the NGOs to accrue some income for future operations not amounting to more than 15% of the funds received for charitable activities.
    • Reduced Tax Liability – Accumulated income is not considered as the taxable income of the NGO, thereby reducing its tax liability.
    • FCRA Benefits – NGOs with 12A certification are eligible to avail seamless foreign contributions.

    80G registration is a pathway to reduction in the tax burden. The key benefits of 80G registration for NGOs are:

    • Credibility – Boosts the credibility of the NGO, thereby attracting the confidence of the stakeholders, including the donors.
    • Tax Benefits – 80G certifications facilitate donors to avail tax exemptions for the donations made to the NGO.
    • Tax Exemption – All NGOs can avail tax exemptions for both the donors as well as the organisation.
    • Funding Support – NGOs can apply for grants and receive additional funding from the government.
    • Donor Support – Boosts transparency and strengthens donor confidence to attract more donor contributions through different channels.
    • Reduced Tax Obligation for Donors – Donors donating to NGOs can use these certificates to reduce their tax burdens despite paying their regular taxes.
    • Legal Identity – These certificates establish the legal identity of the NGOs, giving them access to legal documents required to apply for grants and loans.
    • Foreign Contributions – NGOs with 80G certification can avail hassle-free foreign contributions.