Benefits of 12A and 80G Registration

The 80G and 12A Registration certificate helps an NGO to get income tax exemption. This exemption is granted to the NGO as well as to the donors. It is essential to obtain the certification immediately after the incorporation of the NGO. The main objective of 80G & 12A registration is to encourage the donors to contribute to social work and donate to the organisations with these certifications without the fear of additional costs.

The Income Tax Department issues an 80G Certificate to a non-governmental organisation (NGO) such as a charitable trust or a Section 8 Company. The 80G Certificate is granted to encourage donors to donate funds to such non-profit organisations.

Only 12A and 80G registered NGOs in India can accept international funding with exemption available under FCRA, 2010.

Grants and funds are permitted from recognised Agencies, Governments, and International Sources.

This registration allows more capital for charitable activities through tax exemption over NGO income.

If any applicant in India wants to establish an NGO, then the applicant must obtain 12A Registration Certificate first. After that, the applicant can apply for 80G Registration.

Let’s discuss the registration processes for Section 12AA and Section 80G under the Income Tax Act in India. As of my last knowledge update in September 2021, here’s an overview of these two sections:

Section 12AA Registration Process:

Application: To obtain registration under Section 12AA, an organisation needs to apply to the Commissioner of Income Tax (Exemptions) using Form 10A. This form is typically found on the Income Tax Department’s official website.

Documents Required: Along with the application form, you’ll need to submit a variety of documents, including:

Copy the organisation’s trust deed or memorandum of association, including any amendments.
Details of the organisation’s activities and how they are aligned with charitable purposes.
Copies of financial statements and balance sheets for the past three years.
KYC of Members/Trustees
Contact details of Members/Trustees

Verification: The Income Tax Department will review the application and the provided documents to assess whether the organisation’s activities are genuinely charitable and meet the criteria for tax exemption. This involves ensuring that the organisation’s activities are not carried out for profit and are within the scope of the law.

Grant of Registration: If the Commissioner is satisfied with the application and documents, they will grant registration under Section 12AA. This registration is necessary to establish the organisation’s eligibility for income tax exemption on its income.

Section 80G Registration Process:

Post 12AA Registration: Generally, organisations must first obtain registration under Section 12AA before applying for registration under Section 80G.

Application: To obtain registration under Section 80G, the organisation needs to apply to the Commissioner of Income Tax (Exemptions) using Form 10G. This form is also on the Income Tax Department’s official website.

Documents Required: Along with the application form, you’ll need to submit documents including:

Copy of the organisation’s registration certificate under Section 12AA.
Details of the organisation’s activities and how they fulfil the conditions of Section 80G.
Copies of financial statements and balance sheets for the past three years.
KYC of Members/Trustees
Contact details of Members/Trustees

Verification: Similar to the 12AA registration process, the Income Tax Department will review the application and documents to ensure that the organisation’s activities meet the criteria for tax-deductible donations under Section 80G.

Grant of Registration: If the Commissioner is satisfied with the application and documents, they will grant registration under Section 80G. This registration allows donors to claim deductions on donations made to the organisation.

Conclusion:

Obtaining 12A and 80G registrations under the Income Tax Act offers a multitude of benefits for non-profit organizations. The 12A registration provides exemption from income tax, allowing organizations to utilize their funds more effectively for their social and charitable objectives, while the 80G registration enables donors to claim tax deductions on their contributions, thus incentivizing greater philanthropic support. These registrations not only enhance an organization’s credibility and transparency, but also foster a culture of giving and sustainable growth in the non-profit sector, ultimately leading to positive social impact and a stronger sense of community engagement.