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Unlock tax benefits and amplify your charitable impact with ease. Our experts streamline the 12A / 80G registration process for your organization's philanthropic goals. Let's make a difference together.
Ready to maximize your charitable efforts? Connect with our experts for personalized guidance on 12A / 80G registration.
For NGOs in India, Sections 12A and 80G registrations are of significant benefit. Under Section 12A of the Income Tax Act, 1961, NGOs are granted a one-time tax exemption on their surplus income, effectively relieving them from tax obligations.
The Income Tax Act of 1961 provides a single-time tax exemption known as Section 12A for trusts, NGOs and Section 8 Companies. This exemption allows organisations registered under Section 12A to be exempted from paying taxes on their surplus income.
On the other hand, an 80G registration enables NGOs to issue tax-exemption certificates to donors, motivating them to contribute funds. Donors who contribute to NGOs with an 80G certificate can enjoy significant deductions from their taxable income. These registrations play a pivotal role in fostering transparency, accountability and financial support for the charitable and non-profit sector, bolstering their impact in the nation.
The Income Tax Department issues an 80G Certificate to non-governmental organisations (NGOs) like charitable trusts or Section 8 Companies which is meant to incentivise donors to contribute funds to these non-profit organisations.
NGOs are involved in charitable and non-profit activities and income is generated by them. However, not being registered under Section 12A of the Income Tax Act requires them to pay taxes based on the standard tax rates applicable.
The benefits of registration under Sections 12A and 80G are as follows:
12A Registration:
✅ Eligibility for Government Funding: NGOs with 12A registration are eligible to avail government funding opportunities.
✅ Grants and Aid: Registration under Section 12A allows NGOs to seek grants and aid from both government and international organisations.
✅ Continuity of Exemption: Once an NGO obtains 12A registration, it enjoys tax exemption on its surplus income consistently, as long as it complies with the relevant regulations.
✅ Enhances Credibility: Having 12A registration enhances the credibility and trustworthiness of an NGO in the eyes of donors, government agencies and other stakeholders.
✅ Administrative Benefits: NGOs with 12A registration may enjoy certain administrative benefits, such as simplified procedures for receiving foreign donations or exemptions from certain regulatory compliances.
80G Registration:
✅ Donor Attraction: 80G registration helps NGOs attract donors by providing them with tax benefits for their contributions. 80G registration expands the potential donor base as individuals and corporate entities are more likely to contribute to NGOs with this certification.
✅ Tax Deduction: Donors can reduce the donated amount from their total taxable income, providing financial relief.
✅ Increased Funding Potential: Having an 80G registration enhances the credibility and trustworthiness of an NGO, increasing its chances of receiving more funds and support.
✅ Corporate Social Responsibility (CSR) Funding: Companies fulfilling their CSR obligations prefer to support NGOs with 80G registration, as their contributions are eligible for fulfilling CSR requirements.
To be eligible for 12A and 80G Registration, NGOs must meet the following criteria:
Eligibility conditions for 12A Registration:
✅ Utilisation of Assets: NGO assets should be utilised exclusively for charitable purposes, ensuring that they contribute to the overall welfare and benefit of the society.
✅ Legal Entity: NGOs operating as Public Charitable Trust or under section 8 of the Companies Act, 2013 and exclusively working for public welfare are eligible for 12A registration.
✅ Proper Financial Records: NGOs are required to maintain accurate Books of Account, ensuring transparent recording of all expenditures and receipts related to their charitable activities.
✅ Compliance with Tax Regulations: The organisation should fulfil the necessary requirements for tax exemption as per the provisions of section 80G.
Eligibility conditions for 80G Registration:
✅ Compliance with 12A Registration: NGOs need to fulfil the same eligibility criteria mentioned above for 12A registration to qualify for 80G registration.
✅ Permissible Donations: Donations made to the NGO should fall within the categories specified under section 80G, allowing the donors to claim tax exemptions on their contributions.
What are the Documents Required for 12A and 80G Registration?
Documents Required for 12A registration are:
✅ Trust Deed: Documental evidence, such as the Trust Deed, is needed to demonstrate the creation of the Trust.
✅ Registration Certificate and Memorandum of Association (MOA): For NGOs operating as societies, the Registration Certificate and MOA should be submitted.
✅ Certificate of Incorporation and MoA/AoA: Section 8 companies are required to provide a Certificate of Incorporation and copies of the MoA and AoA of the company.
✅ Form 10A: The application form for 12A registration, known as Form 10A, should be filled out accurately with all the necessary details.
✅ Three-Year Bank Account Statement: A bank account statement for the Trust reflecting transactions for the past three years must be provided to showcase the financial activities and stability of the organisation.
✅ PAN of the Organisation: The PAN (Permanent Account Number) of the organisation should be submitted as proof of identification.
Documents Required for 80G Registration:
✅ Memorandum of Association (MoA) and Registration Certificate (for Section 8 companies and Societies) or Trust Deed (for Trusts)
✅ No objection certificate from the property owner where the registered office of the institution is located
✅ Form 10G
✅ Copy of the Permanent Account Number (PAN) of the NGO
✅ Copies of Utility Bills such as electricity bill, water bill or house tax receipt for verification of the registered office address
✅ List of donors along with their addresses and PAN
✅ Documents related to Income Tax Returns and the Book of Accounts for the past three years
✅ List of welfare activities being carried out and progress report of the last three years
✅ Detailed list of the Board of Trustees or governing body members
The application for obtaining an exemption certificate under Section 12A and 80G can be made immediately after the registration of the NGO. You can choose to file the application for both certificates either together or separately. It is important to note that the application under Section 12A should be filed before the application under Section 80G. The Commissioner of Income Tax, who has jurisdiction over the institution, is where both the applications must be filed.
✅ Validity of 80G certificate: According to the amended provisions of Finance Act,2020, the renewal of registrations will remain valid for a duration of 5 years. Subsequently, the application for 80G approval must be submitted again at least 6 months before the expiration of the registration.
✅ Validity of 12A certificate: The 12A registration has also been brought under the new changes with a new validity of 5 years by the amending Finance Act of 2020. Similar revalidation provisions apply under 12A as under 80G.
An NGO, which can be established as a Charitable Trust, Society or Section 8 Company, is dedicated to serving non-profit causes. Once the NGO is formally registered, it becomes eligible for various tax exemptions, benefits, reliefs and provisions for tax deductions for donors. To avail these benefits, it is mandatory for the NGO to obtain 12A and 80G registrations. Without these registrations, any income earned by the NGO, whether from services, production or donations, will be treated as normal taxable income without considering the purpose of such income.
We, at Satkriti Advisors can help you with everything from providing advice in the initial phase to ensuring that you meet all the necessary requirements and keeping your NGO in good legal standing.