What is the Procedure for Registration Under 12A and 80G for NGOs

To avail benefits of tax exemption, it is necessary for NGOs to register themselves with income tax under Section 12A and 80G of the tax act.  Section 12A and 80G of the Income Tax can be applied together or separately as well. If any organization is willing to apply the sections separately then an application for registration under section 12A shall be applied first. Section 12A registration is compulsory to apply for registration under section 80G of the Income Tax Act. This article will provide complete information regarding what is the procedure for registration under 12A and 80G for NGOs.

Applicability of registration under 12A and 80G for NGOs

The registration under 12A and 80G is applicable to only those NGOs and charitable organizations that fulfil the following conditions: –

• Is a Registered Society or a Charitable Trust.
• No income is generated from the business.
• Assets and income is used only for the charity purpose.
• Books of accounts of the receipts and expenses are maintained regularly.
• No undue benefits from the funds are derived by the governing body of the organization or the trustees.
• Does not work to benefit any particular religion or caste.
• Separate accounts to be maintained for business related income. Donations received by NGO not to be used for such businesses.

12A registration procedure

Trusts, Societies and Section 8 Company enjoys the benefit of exemption from paying tax under 12A registration. The NGOs are non profit organisations, however; they do have income and are required to pay tax in normal rates if it is not registered under Section 12A of the Income Tax Act. The procedure for 12A registration is as follows: –

• The applicant is required to file an application using Form 10A as per the Rule 17A of the Income Tax Act, 1962 with the Jurisdictional Commissioner of Income Tax (Exemptions).
• The Jurisdictional Commissioner shall verify the authenticity of the activities of the organization once the forms and all the necessary documents along with it are received to him. The commissioner can call for additional documents or information if required.
• If the commissioner is satisfied upon the verification, a satisfactory report will be generated and he shall pass an order in writing to grant 12A registration to the applicant. In cases where the commissioner is not satisfied upon the verification, he shall reject the application after which the applicant shall be give a right to be heard.

The 12A registration can be cancelled at any point of time on the grounds that the activities of the organization are carried out against the objectives of the institution are not genuine or the NGO is benefitting a particular caste or religion or the income of the organization is being used for benefitting a specific person or persons or the funds are invested in prohibited activities.

Documents required for 12A registration

The documents that are required for the 12A registration are as follows: –

• Form 10A.
• Documental evidence of the formation of the NGO or Trust such as- Registration certificate, Memorandum of Association of a Society, Trust Deed of a Trust, Certificate of Incorporation submitted by Section 8 Company along with Memorandum of Association (MOA) and Articles of Association (AOA) of the company.
• PAN Card^[1] of the organization.
• 3 years bank account statement of the Trust.

80G registration procedure

80G registration is issued to an NGO by the Income Tax Department. The purpose behind providing the 80G certificate is to encourage and initiate more donors and make more donations to the organizations. The donor gets benefits of tax exemption up to 50% of his donation by donating to the organizations with 80G and NGO registration. He is allowed to deduct the donations from their Gross Total Income. To avail such exemption, the donor has to attach the stamped receipt that was issued by the NGO to him. The receipt must mention the date, name and PAN Card of the organization. The 80G registration procedure is as follows: –

• The applicant is required to submit the application for 80G registration with the Jurisdictional Commissioner of Income Tax (Exemption).
• The premise inspection is done by the Income Tax Department once the form and the required documents are submitted for 80G registration.
• The applicant might be asked to submit any additional documents and evidence that the officials might require.
• The commissioner on being satisfied upon the verification and scrutinizing all the documents and investigating the office of the NGO shall grant an 80G certificate to the applicant.

Documents required 80G registration

The documents required by the applicant for 80G registration are as follows: –

• Form 10G.
• In the case of Section 8 Company and society a Memorandum of Association and registration certification, and in case of Trust a Trust Deed.
• If the property is rented then a No Objection Certificate (NOC) from the owner of the property.
• If the property is self owned then the copy of the utility bills- the electricity bill, water bill or house tax receipt.
• Copy of the PAN Card.
• List of donors along with their complete address and PAN Card.
• Three years of bank account statements and Income Tax Return documents.
• Deed for verification- Original MOA, RC or Trust Deed.
• Three years list of welfare activities carried out by the NGO and the progress report.
• A detailed list of the board of trustees.

Validity of Registration under 12A and 80G for NGOs

Registration under 12A and 80G for NGOs is valid for a life time till the existence of an NGO.

Conclusion

A Non Governmental Organisation (NGO) is a non- profit organization established to promote social welfare and for a charitable purpose. Many benefits are provided to the NGOs upon its registration and one of the benefits is the tax exemption benefit. NGOs are exempted from paying tax if they are registered under Section 12A and 80G of the Income Tax Act. The application for registration under 12A and 80G for NGOs has to be applied with the Income Tax Commissioner having jurisdiction over the institution.

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