Overview of 80G and 12A
Registrations
80G and 12A registrations apply only to NGOs
and Charitable Organizations if they fulfil the following conditions:
They must not have any income generated from a
business
They should either be a charitable trust or a
registered society
Also, such organizations should not be using
their assets or income for any other purpose other than making charity
Furthermore, they must maintain a regular book
of accounts in favor of their receipts and expenses.
The trustees or any other body governing the
organization should not be involved in deriving any undue benefits from these
funds
They should not be working for the benefit of
any particular caste or religion
Also, in the case of business-related income,
the organization should maintain a separate book of accounts. However, the
donations received by the NGO must not be used for such businesses.
An NGO Must Apply For 12A And 80G Registration
Immediately After Its Incorporation.
What is an 80G Certificate?
An 80G Certificate is issued by the Income Tax
Department to a non-governmental organization (NGO) such as a charitable trust,
or a Section 8 Company. The 80G Certificate is granted to encourage the donors
to donate funds into such non- profit organizations. Furthermore, the donor
gets a tax exemption of 50% when they make donations to such organization, as
they become eligible to deduct such amount from their Gross Total Income.
Additionally, in order to avail the exemption, the donor needs to attach the
stamped receipt of the donation made. Such a receipt must contain the donor’s
name, date of donation, and PAN of the organization.
About 12A Registration
Now that we have covered the 80G Registration, we
will know about Section 12A and how to get registered under Section 12A of the
Income Tax Act, 1961.
Section 12 A of the Income Tax Act, 1961, is a
onetime tax exemption provided to trusts, NGOs and Section 8 Companies.
Organizations holding a registration under section 12A are exempted from paying
taxes on their surplus income.
NGOs are organizations involved in charitable
and non-profit activities. However, they do earn income and they are required
to pay tax as per normal rates if not registered under section 12A, Income Tax
Act.
What are the Documents Required for
the 80G Registration?
The following documents are required for 80G
registration is as follows:
MoA and Registration certificate in case of
Section 8 companies and Societies and a Trust Deed in case of a Trust
No objection certificate from the owner of the
property where the registered office of the Institution is situated
Form 10G
A copy of the PAN of the NGO
Copy of Utility Bills such as Electricity bill,
water bill or House Tax Receipt
A list of the donors along with their address
and PAN
The documents related to Income Tax Returns and
the Book of Accounts of the past three years
The list of the welfare activities being
carried out & the progress report of the last three years
A detailed list of the Board of Trustees
Original RC, MoA, or Trust Deed.
What are the Documents Required for
12A Registration?
The following documents are required for 12A
registration:
Documental evidence of the creation of the
Trust or NGO {Trust Deed of a Trust; Registration Certificate and Memorandum of
Association {MOA} of a society}
Section 8 companies need to submit a
certificate of incorporation and copies of MoA and AoA of the company
Form 10A.
Three-year bank account statement of the Trust.
PAN of the organization.
Registration procedure for 80G
Registration
80G Registration Procedure Consists Of The
Following Steps:
Apply for an 80G certificate to the
Commissioner of Income Tax (Exemption) within the jurisdictional area of the
entity along with the required documents.
An on premise inspection is done by the Income
Tax department after the form, and the required documents for 80G registration
are submitted
However, the Income Tax Officials might ask for
additional documents or evidence if they seem unfit, or if they feel anything
is missing
Upon satisfactory verification of documents and
the office of the NGO, 80G certificate is granted to the institution by the
Commissioner.
Note: The Validity of an 80G Certificate is for a
lifetime of the institution.
What is the Procedure for 12A Registration?
You are required to follow these steps for 12A
registration:
You need to file an application in the Form
10A, as per Rule 17A of the Income Tax Act, 1961
The application needs to be filled as per the
guidelines of the Jurisdictional Commissioner of Income Tax (Exemptions)
The Commissioner verifies the genuineness of
the activities of the organization, once he receives the Form and the
documents. Also, he can call for additional documents or information if he
considers necessary
On the satisfactory report, the Commissioner
passes an order in writing for the grant of 12A Registration. If the
Commissioner is not satisfied he will reject the application, after which the
applicant is provided a fair chance to be heard.
12A Registration can be cancelled at any point
of time subject to the proof that the organization is indulged in the following
activities:
Is against the object of the institution
Are not genuine
Is benefitting a specific religion or caste
The funds are being invested in prohibited means
The income of the institution is used for the
benefit of specific individual or group of persons
Note: The12A Registration is valid for a
lifetime of such institution.