All about the 12A Registration & 80G Registration

All about the 12A Registration & 80G Registration

Non profit Orgination are start for good reason, & the govt provides income tax exemptions to help them with raising funds. Now is the time to register your NGO U/s 12A & 80G in order to avail of those advantage for your Non profit Orgination.

80G & 12A applicable only to charitable organizations & NGO’s that::-

• Businesses that have not generate income
• A registered society or a charitable trust
• Assets or income should be used only for charitable purpose
• Maintenance of books of accounts is necessary for their receipts and expenses
• Any benefit from these funds should not be taken by trustees or the governing body of the organisation
• Should not provide any benefit to a particular caste or religion

Separate account should be maintained for business income. Such businesses should not use income received from NGO’s

What is the 80G Certificate under Income tax act ?

It is certificate issued by Income tax department to a NGO’s , NPO’s , Charitable trust or Section 8 Company. The main aim is to encourage donations for collecting  funds to these organisations. The donor gets exemption of 50% on his donation because the donor is allowed to deduct their donations from Gross Total Income. The Donor first need to attach the stamped receipt against the donation to avail exemption which is issued by the NGO- the receipt must include the name, date, and PAN of the organization.

What is 80G Registration Process?

These the following steps involved in the registration of 80G

• Firstly the application for certificate of 80G it should be submitted in the jurisdictional area of the institution to the commissioner of income tax (exemption)
• After the submission of forms and required documents of 80G registration, Income tax department will conduct an on premise inspection.
• Institution needs to make all the documents and evidence available for the inspection as it might be asked by the officials.
• The 80G certificate is awarded to the institution by the commissioner for satisfactory verification and scrutinizing of documents and the office of the NGO

Documents Required for 80G Registration

Following are the documents required for registration of 80G

• Form 10G.
• Section 8 companies and societies requires registration cetificate and MOA and Trust requires rust Deed.
• Owner of the property may not send objection certificate at he location of registered office of the institution
• Copy of pan card of the NGO
• Utility Bills copy i.e., Water bills, electricity bills or House Tax Receipt.
• List of Donor along with their complete address and PAN.
• Documents of income tax return along with Book of Accounts of last three years.
• List along with the progress report of welfare activities being carried out for last thre years.
• Complete list of the Board of trustees.
• Required deed for verification- Original RC, MOA or trust deed.

What is Income tax Section 12A Registration?

• Now we can further discuss about 12A registration and its registration process.
• 12A registration provides exemption from paying of income tax to Trusts and NGO’s and to other Section 8 companies .Those organisations which are meant for charitable and non profit activites are knownas NGO’s. As they generate income and would be required to pay tax on it as per the normal rates incase if not registered under Section 12A of the Income Tax Act.
• According to Section 12A of the IT Act, 1962 there is no difference between charitable and religious trusts. Both kind of organisation can be registered under Section 12A.

12A Registration Process

• After using Form 10A, as per Rule 17A of the Income Tax Act, 1962 application should be done. The application  needs to be submitted to the jurisdictional Commissioner of Income Tax( Exmptions).
• Next step After receiving Form and documents the commissioner verifies the authenticity of the activities of the organisation. He can ask for additional documents and  additional information as deemed fit.
• He will pass an order in riting for grant of 12A Registration on satisfactory report,. The commissioner can reject the application if he is not satisfied after which a fair chance to be heard will be given to the applicant.

What are the benefits of Section 12A Registration?

• For establishing an NGO the first form of registration applicant need to fill would be the 12A registration. It is an exemption which is applicable to all NGO’s that have to apply for exemption under provisions of the Income Tax Act,1961. These are the benefits of 12A registration.

Government Schemes and Grants for NGO Sector-

• An entity i.e., an NGO or Society can avail all kind of schemes and grants provided by the government by taking the exemption certificate available under 12A.The NGO or society shod not take the grant if registration is not done.

Tax Exemption-

• Firstly NGO has to furnish the 12A certificate for claiming exemption after that NGO and society will get exemption from paying tax by claiming this exemption.

Proof of Existence-

• It is legal and valid legible proof of existence to the government that this form of entity. i.e NGO is registered. Legal proof is required to secure some form of grant or loans from the government.

Applicability to NGO and Societies –

• Along with NGO’s this form of certificate would also be applicable for societies which are registered as per the requirements of the Societies registration Act.

What are the Benefits of 80G Registration ?

• Society and NGO can claim benefits U/s 80G of the Income Tax Act, 1961. For this NGO or Society needs to get registered as per requirements under 12A. These are benefits given to an entity that is claiming for this form of exemption.

NGO Reputation increase-

• The entity will become more reputed in the eyes of public after having 80G registration.The donor will become more secure after having this certificate for some form of exemption and paying less tax when it comes to donating to a particular NGO. However the certificate is useful for the donor.

More Donors-

• This 12A certificate is not just increases the reputation of the NGO or society but also increases the amount of donors. Tax exemption would be claim by more donors under this system.

Tax can be saved by Donors –

• This certificate of NGO can be utilised by Donors to save tax while paying certain amount of tax to the respective govt authorities.

Funding by Government of India –

• The NGO’s and societies having these certificates can gets more grants and funding from government.

Documents Required for 12A Registration

Following are the documents required for 12A registration ;-

• Documental evidence required for the creation of trust or NGO – trust deed of a trust, Registration certificate ,MOA of a society, certificate of incorporation and copies of MOA & AOA of the company submitted by section 8 companies.
• Form 10A
• Statement of bank account of the trust of last three year.
• Pan card of the organisation.

Some Donated More Than They Earned

What IFCCL?

• To start the application process, you only need to share your IT login credentials.
• Our CS/CA will prepare & submit the application on your behalf.
• We will guide you through the entire procedure.
• IFCCL has worked with thousands of non-governmental organisations and is acquainted with their needs.

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