How to Start a 12 A & 80 G REGISTRATION

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Overview of 12A and 80G Registration

The 80G Certificate, granted under the Income Tax Act, 1961, encourages donations to NGOs by offering donors a 50% tax exemption on their taxable income. To avail of this benefit, the donor must receive a stamped receipt from the NGO for the donation.

12A Registration is the first step for NGOs to obtain a Certificate of Exemption from the Income Tax Department. NGOs registered under Section 12A are exempt from paying income tax, as this registration provides proof of the organization’s legitimate non-profit status. Additionally, the 12A Certificate is essential for obtaining government permission and international recognition for the NGO.

Importance of 12A and 80G Registration in India

Both 12A and 80G Registrations are highly recommended for all NGOs, whether they are a Trust, Society, or Section 8 Company.

  • 12A Registration: This allows NGOs to claim complete exemption from income tax.
  • 80G Registration: This encourages donations by offering tax deductions to donors, making it easier for NGOs to attract funding.

Without these registrations, NGOs may face standard tax rates and find it more difficult to attract donations.

 
 
 

Benefits of 12A and 80G Registration in India

Both Sections 12A and 80G have significance and offer several benefits to NGOs with such Registrations. The advantages are as follows:

  • Only NGOs who possess Registration under Section 12A and 80G are worthy of availing of government funding.
  • With 80G Registration, NGOs can use allure donors to donate funds to the organization.
  • Using this Registration, the donors can lessen/reduce the donation amount to the NGO from their total taxable income.
  • Registration under Section 12A helps organizations seek grants from government & organizations abroad.

Eligibility Criteria for 12A and 80G Registration

The following are the key eligibility requirements for 12A and 80G Registration:

  • The NGO’s assets must be used exclusively for charitable purposes.
  • The NGO must be operating as a Public Charitable Trust or under Section 25 of the Companies Act, 1956, and should focus solely on public welfare.
  • The NGO must maintain accurate and up-to-date books of accounts, detailing its expenditures and receipts.
  • Donations made to the NGO, as permitted under Section 80G, are eligible for tax exemptions.

Documents Required for 12A and 80G Registration

Documents for 80G Registration
To obtain the 80G Certificate, the following documents are required:

  • PAN card of the NGO
  • Memorandum of Association (MoA) and Registration Certificate for Societies & Section 8 Companies, or Trust Deed for Trusts
  • IT Returns and Books of Accounts for the past 3 years
  • Form 10G
  • Certificate of Incorporation
  • Trust Deed (if the NGO is a Trust)
  • Copy of the latest utility bills (e.g., Water, Electricity Bills, or House Tax Receipt)
  • No Objection Certificate (NOC) from the property owner if the office is rented
  • Detailed list of the Board of Trustees
  • List of donors with their PAN and address
  • Complete list of welfare activities

Documents for 12A Registration
To obtain the 12A Certificate, the following documents are required:

  • Form 10A
  • Financial statements for the last three consecutive years
  • PAN card of the organization
  • Documents establishing the creation of the Trust or NGO (e.g., Trust Deed, Registration Certificate, or Memorandum of Association (MoA) of the Society)
  • For Section 8 Companies: Certificate of Incorporation and copies of MoA & AoA.

Procedure for 12A and 80G Registration in India

  • Procedure for 80G Registration: Certificate of 80G Registration can be obtained in the four simple steps as follows:

Step 1: First, the applicant must file and submit the Application for 80G Registration to the Commissioner of Income Tax Department in the concerned jurisdictional area of the organization.

Step 2: Once you have submitted all the documents and an application to the Income Tax Department, they will scrutinize them.

Step 3: If the officials need more information, they will ask you for additional documents. You need to submit those documents within the prescribed time.

Step 4: If the department is satisfied with verifying the documents and the information provided, Commissioner will issue an 80G Certification to the organization.

  • Registration Process to obtain 12A Certificate: One can obtain a 12A Certificate by following the steps described below:

Step 1: As per Rule 17A of the Income Tax Act, 1961, the applicant must file Form 10A with the Jurisdictional Commissioner of the Income Tax Department.

Step 2: The Commissioner will verify the Application and the documents to check the authenticity of the information provided. If something is missing, he will ask for additional documents.

Step 3: If the Commissioner is satisfied with the report, he will issue a Certificate of 12A Registration. However, if he doesn't find the documents and Application relevant, then he will reject the Application.

Note: 80G and 12A Certificates have validity for the lifetime.