What is 12A and 80G Registration?
These are two essential registrations for any NGO to avail itself of the facility of tax exemption:
12A Registration: This is an exemption registration for income tax that entails income derived for a charitable cause and thus is not liable to pay tax.
80G Registration: This encourages people to donate to NGOs by allowing donors to deduct the contribution from their taxable income.
Who is Eligible for 12A and 80G?
- Charitable Trusts
- Registered Societies
- Section 8 Companies-non-profit organizations under the Companies Act
- Religious Organizations
- Educational and Medical Institutions
- Eligibility Criteria
To be eligible for 12A and 80G, an organization should meet the following criteria:
The organization should be a non-profit organization and must be registered as a trust or society or Section 8 company. It should be involved in charitable or religious activities.
The income shall be used solely for charitable purposes. Maintain proper books of accounts and get them audited every year and submit the return of income to the concerned Income Tax Department. The NGO shall not support any political party. Benefits of 12A and 80G Registrations Exemption of Taxes to the NGO: The NGOs can focus more on charitable activities rather than bother about the income tax on their earnings. Tax-Deductible Donations to the Donors: Donations to an 80G-registered NGO enable donors to claim a deduction. Enhanced Credibility: Having the 12A and 80G registrations enhances the credibility of the NGO, and thus, more donations are attracted.
Government Grants: Most of the funding schemes of the government demand this 12A and 80G registration for NGOs.
Documents Required for 12A and 80G Registration
- Trust Deed or Society Registration Certificate
- PAN card of the organization
- Bank account details
- Audited financial statements
- List of trustees or directors
- Details of the activities carried out by the organization
Registration Procedure
Incorporation of the NGO: Form your organization as a trust, society, or Section 8 company.
Preparation of Documents: Arrange the documents required like registration certificates, balance sheets, profit and loss accounts, etc., along with the Memorandum of Association.
Filing Application: The application has to be filed online by using Form 10A at the website of the Income Tax Department.
Inspection and Verification: The tax department will verify your application and scrutinize your documents.
Registration Certificate: On approval of the application, a certificate will be issued, acknowledging your registration under Sections 12A and 80G.
