80G AND 12A REGISTRATION

80G AND 12A REGISTRATION

Registration u/s 80G and Registration u/s 12A is applicable only to Charitable Trust, Section 8 Company or NGO.


Overview

An organization or entity who is not working to earn profit but their main objective is to serve the people becomes eligible to avail Income Tax exemption. Charitable Trust, Section 8 Company or NGO are such organization who can avail the income tax exemption. 
 

It is compulsory for all such non-profit organizations to get registered under section 12A immediately after their incorporation. The organization can apply for the registration u/s 80G and Section 12A together or it can be applied separately.
 

If they want to apply separately, then at first they have to get registered under section 12A. After obtaining the section 12A registration certificate, the organization can apply for the registration under section 80G of Income Tax Act, 1961.
 

What is 80G Certificate

Income Tax Department issues 80G Certificate to a Charitable Trust, Section 8 Company, non-profit organization (NPO) or non-governmental organizations (NGO). The purpose behind the 80G certificate is to encourage maximum number of people to donate funds to such organizations who work only for the welfare of the general public.

The people (donor) who donate can avail tax exemption on 50% of his donation as per the Income Tax Act. The donor will be allowed to deduct their donations from their Gross Total Income. In order to avail the tax exemption, the donor will be required to attach donation receipt as issued by the NGO. Name, date and PAN of the organization should be mentioned in the receipt.
 

Documents Required for 80G Registration
 

For 80G registration, the following documents are required:

  • Form 10G.
  • In case of Societies and Section 8 Companies, Certificate of Registration and Memorandum of Association is must.
  • In case of Trust, a trust deed should be submitted.
  • A copy of No objection certificate (NOC) from the owner of the property where the registered office of the organization is situated.
  • A copy of PAN card of the NGO.
  • A copy of Utility Bills such as Electricity bills, water bills or House Tax Receipt.
  • Proof of registered office of the NGO
  • A complete list of the donor along with their complete address and PAN.
  • Last three years Book of Accounts & a copy of Income Tax Return.
  • A complete list of all the welfare activities that is being carried out & the progress report of last three years.
  • Detailed list of the board of trustees.
  • Deed for Verification – Original RC, MoA or Trust Deed.

     

80G Registration Process

One has to go through the following steps in order to get the 80G registration and the steps are as follows:

  • The 80G registration application has to be submitted to the Commissioner of Income Tax (Exemption) in the jurisdictional area of the organization.
     
  • An on the premise inspection will be conducted by the Income Tax Department after the submission of 80G registration application along with the requisite documents.
     
  • The income tax officer can ask for some other necessary documents from the organization and it is compulsory for them to provide those asked documents to the officer.
     
  • After the proper verification and scrutiny of the documents and the NGO office, if found satisfactory the 80G certificate will be given to the organisation by the Commissioner.

     

Validity of 80G Certificate
 

The 80G certificate is valid for 5 years.
 


 

What is 12A registration?

As a result of 12A registration, NGOs trusts and section 8 companies get exempted from the payment of income tax. NGOs are organizations who basically perform activities related to charitable and non-profit works. In spite of this they are liable to pay income tax as they do have an income.

If these entities do not get registered under section 12A of the Income Tax Act, they will have to pay income tax as per the rates applicable but by virtue of section 12A of the income tax act they are not required to pay tax as this section do not differentiate between types of trusts that is charitable and religious.
 

Documents required for 12A registration

The document required for 12 registration can be listed as follows:

  • Form 10A
  • Trust deed in case of trust will be the important document. 
  • Important documents such as Registration Certificate of the society and Memorandum of Association (MOA) in case of society and for Section 8 companies’ incorporation certificate along with the copies of MOA and AOA needs to be submitted.
  • Bank account details for the last three years of the trust.
  • Pan card of the organization
     

12A Registration process

The applicant has to follow the given steps in order to get the 12A registration and the steps are as follows:

  • The application process is performed by form 10 A as per the rule 17 a of the income tax act. This application is filed with the concerned jurisdictional Commissioner of income tax (exemptions).
     
  • After submission of the form and relevant documents that judicial commissioner verifies  along with the activities of the concerned organisation. The commissioner can ask for additional papers for the verification process.
     
  • After the successful verification of the application the judicial commissioner will grant 12A registration. The application can be rejected also if the commissioner is not satisfied and in this case applicant is given a chance to present his case before the commissioner.
     

12A registration can also be cancelled at any point of time if the activities of the organisation is found against its object or the activities of the organisation is not genuine or is for the benefit of a specific caste or religion or the funds are being invested in a dubious manner or the income of the entity is diverted for the benefit of other persons.
 

Validity of 12A registration

The validity of 12A registration is for lifetime.
 

Important point

Section 80G and Section 12A registration is only applicable for those entities where

  1. No other income being generated from the business
  2. The organization is either a charitable trust or a registered society
  3. Apart from charity work, they are not using their assets or income for any other purpose
  4. Maintains regular books of accounts of their receipts and expenses.
  5. The trustees or the governing body of the organization are not deriving any undue benefit from these funds
  6. They should not be working to benefit any particular caste or religion
  7. If the organization is having business related income, then they are required to maintain separate accounts for it. The fund/donations received by the NGO should not be used for such businesses.
     

FREQUENTLY ASKED QUESTIONS (FAQ’s)
 

What is 80G certificate?

Income Tax Department issues 80G Certificate to a Charitable Trust, Section 8 Company, non-profit organization (NPO) or non-governmental organizations (NGO). The purpose behind the 80G certificate is to encourage maximum number of people to donate funds to such organizations who work only for the welfare of the general public.

The people (donor) who donate can avail tax exemption on 50% of his donation as per the Income Tax Act. The donor will be allowed to deduct their donations from their Gross Total Income. In order to avail the tax exemption, the donor will be required to attach donation receipt as issued by the NGO. Name, date and PAN of the organization should be mentioned in the receipt.
 

What is 12A registration?

As a result of 12A registration, NGOs trusts and section 8 companies get exempted from the payment of income tax. NGOs are organisations who basically perform activities related to charitable and non-profit works. In spite of this they are liable to pay income tax as they do have an income.

If these entities do not get registered under section 12A of the Income Tax Act , they will have to pay income tax as per the rates applicable but by virtue of section 12A of the income tax act they are not required to pay tax as this section do not differentiate between types of trusts that is charitable and religious.
 

What are the documents required for 80G registration?

For 80G registration, the following documents are required:

  • Form 10G.
  • In case of Societies and Section 8 Companies, Certificate of Registration and Memorandum of Association is must.
  • In case of Trust, a trust deed should be submitted.
  • A copy of No objection certificate (NOC) from the owner of the property where the registered office of the organization is situated.
  • A copy of PAN card of the NGO.
  • A copy of Utility Bills such as Electricity bills, water bills or House Tax Receipt.
  • Proof of registered office of the NGO
  • A complete list of the donor along with their complete address and PAN.
  • Last three years Book of Accounts & a copy of Income Tax Return.
  • A complete list of all the welfare activities that is being carried out & the progress report of last three years.
  • Detailed list of the board of trustees.
  • Deed for Verification – Original RC, MOA or Trust Deed.
     
What are the mandatory documents required for 12A registration?

The document required for 12 registration can be listed as follows:

  • Form 10A
  • Trust deed in case of trust will be the important document. 
  • Important documents such as Registration Certificate of the society and Memorandum of Association (MOA) in case of society and for Section 8 companies’ incorporation certificate along with the copies of Memorandum of Association and Articles of Association needs to be submitted.
  • Bank account details of the trust for the last three years.
  • Pan card of the organisation
     
What is the validity of 80G Certificate?

The 80G certificate is valid for the 5 years.
 

What is the validity period of 12A registration?

The validity of 12A registration is for lifetime.
 

When can an organization apply for registration under section 12A and 80G of Income Tax Act?

The organization can make the application for registration under section 12A and 80G just after registration of the NGO.
 

Where the applicant should apply for registration under section 12A and 80G of Income Tax Act?

The applicant can make the application for registration under section 12A and 80G to the Commissioner of Income Tax (Exemption) having jurisdiction over the organization.
 

Within what time the applicant will receive the registration certificate under section 12A and 80G of Income Tax Act?

Within 3 to 4 months the applicant will receive the registration certificate under section 12A and 80G of Income Tax Act.
 

Can the organization apply for the registration under section 80G and 12A together?

Yes, the organization can make an application for registration under section 80G and 12A together.
 

Edited by Minu Mishra

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