How to Start a 12A and 80G Registration

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An Overview of 12A and 80G Registration

80G Certificate is granted under Income Tax Act, 1961 to NGOs by Income Tax Department. The main objective behind the grant of 80G Registration is to motivate more donors to the organizations to donate funds. Moreover, the donors receive a 50% tax exemption on their total taxable income. To avail of this exemption, the donor must attach the stamped receipt against the donation issued by the NGO.

12A Registration is the initial step NGOs must follow to seek a Certificate of Exemption from the Income Tax Department. Companies registered under Section 12A don't need to pay income tax as they are exempted from it. Furthermore, the 12A Certificate helps you seek permission from the government and the organizations abroad as 12A Registration acts as legitimate proof of your NGO's existence.

Significance of 12A and 80G Registration in India

  1. 12A and 80G Registration are advisable for all NGOs, whether a Trust, Society or a Section 8 Company.
  2. NGOs with 12A Registration can claim a complete exemption from the IT (Income Tax) Department. However, those with 80G Registration Certificate get the advantage of attracting more donors to the organization by donating funds.
  3. Being an NGO, you don’t need such Registrations; then, you will be subject to regular tax rates. Furthermore, attracting donors' donations becomes arduous.

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 for 12A and 80G Registration

Following are the eligibility criteria for 12A and 80G Registration:

  • NGO assets should only be used for charitable purposes;
  • NGOs working as Public Charitable Trust or u/s 25 of the Companies Act, 1956 working only for the public welfare are permitted for this provision;
  • NGOs should correctly maintain Books of Account of their expenditures & receipts;
  • A donation as permitted u/s 80G is allowed for tax exemption.

Documents required for 12A and 80G Registration

  • Documents for 80G Registration: To obtain an 80G Certificate, you need to provide the following documents:
  1. PAN card of NGO;
  2. MoA and Registration Certificate in case of Societies & Section 8 Companies and a Trust Deed is required in case of a Trust;
  3. Documents related to IT Returns and Book of Accounts of the last 3 years.
  4. Form 10G;
  5. Certificate of Incorporation;
  6. Trust Deed, in case the NGO is a Trust;
  7. Copy of the latest utility bills such as Water or Electricity Bills or House Tax Receipt;
  8. NOC (No Objection Certificate) from the property owner if the office is located on a rented property;
  9. A detailed list of Board of Trustees;
  10. A detailed list of donors along with their PAN and complete address;
  11. A complete list of welfare activities
  • Documents requred to obtain the 12A Certificate:
  1. Form 10A;
  2. Financial statements for the consecutive three years;
  3. PAN card of the organization;
  4. Documents for the creation of the Trust or NGO (Trust Deed of a Trust, Registration Certificate & Memorandum of Association (MoA) of a Society);
  5. In the case of Section 8 Company, submit a Certificate of Incorporation and copies of MoA & AoA of the company.

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.

FAQs of 12A and 80G Registration

The term “Section 80G Certificate” denotes the certificate issued by the Income Tax Department to the NGO, Section 8 Company, or Trust.

The Qualifying Limit for Section 80G is 10% of the Adjusted Gross Total Income.

The features of Section 80G are Donation in Real Money; Deduction available on Gifts; and Stamped Receipt is given to the Trust.

The term “Section 12A Certificate” denotes a registration obtained by the NGO for availing Tax Exemption from the Income Tax Department.

An NGO with 12A Registration is eligible to claim a complete Tax Exemption from Income Tax Department.

The documents required are Form 10A; Financial Statements for the last 3 years; PAN Card; Certificate of Incorporation; Trust Deed (in case of Trust); Memorandum of Association; MOA and AOA.

The main difference between the both is that the former assist an NGO in getting Tax Exemption from the IT Department. In contrast, the latter offers benefit to the Donor of an NGO.

One can apply for the registration under Section 80G and Section 12A by visiting the official website of the Income Tax Department.

One can avail of from 50% to 100% tax deduction from the Income Tax Department without restriction.

One can calculate the deduction by subtracting the limit provided from the Gross Total Income.

One can avail of from 50% to 100% tax deduction from the Income Tax Department without restriction.

One can submit the proof for Section 80G either by submitting the same to the employer or by filing an annual return.

No, the provisions of TDS are not applicable to Donations.

A Trust can accept up to Rs 2000 in cash as Donation.

A Trust can accept deposit above Rs 2000 but in any form other than Cash.

Under section 80G, the Income Tax Department allows the taxpayer to get relief by deducting the donations made to the charitable institutions from the Gross Total Income.

Both NGOs and Charitable Institutions can apply for registration under section 12 A.

No, an individual cannot claim an exemption under section 80G for the donations made to Foreign Trusts.

The main difference between the both is that the former provides the process of registration under Section 12A. In contrast, the latter provides for the applicability of sections 11 and 12.

One can apply for the registration under Section 80G and Section 12A by visiting the official website of the Income Tax Department.

Yes, one can apply for Registration under Section 80G and 12A in both ways, i.e., together or separately.

The Registration under Section 80G has lifetime validity.

The Registration under Section 12A has lifetime validity.

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