80G And 12A Registration

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80G And 12A Registration


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About 80G And 12A Registration

An NGO & 80G can apply for 12A for tax exception on a surplus fund of the NGO as well can obtain 80G certification for donor’s tax exception.

It is a registration done by NGO to get an organization income exempted from Tax. All income shall not be taxable after 12A registration. If NGO does not get 12A registration, income tax is payable on surplus during the year.Navigating the realm of nonprofit organizations involves understanding various legal and financial aspects, including tax exemptions. Among the essential certifications for nonprofits in India are 80G and 12A registrations. These registrations provide tax benefits to donors and exemptions to the organization, fostering financial sustainability and growth. In this guide, we delve into what 80G and 12A

80G and 12A Registrations

80G Registration

  • 80G registration is a certification that enables donors to claim tax deductions on donations made to eligible NGOs and charitable institutions.
  • Donors can avail deductions up to 50% or 100% of the donated amount, depending on the nature of the organization and the specific provisions under which it is registered.
  • NGOs seeking 80G registration must meet certain criteria, including maintaining proper accounts, adhering to legal compliances, and ensuring that their activities align with the objectives specified by the Income Tax Act.

12A Registration

  • 12A registration grants exemption to nonprofit organizations from paying income tax on their surplus income, ensuring that the funds are reinvested in furthering their charitable objectives.
  • Obtaining 12A registration is crucial for nonprofits to maintain their tax-exempt status and attract potential donors seeking tax benefits.
  • Organizations must apply for 12A registration with the Commissioner of Income Tax (Exemptions) by submitting the required documents and demonstrating their charitable activities and objectives.

Advantages

Under Section 12A

  • Income will be exempted from taxation.
  • Benefits of taking grants from Government, Abroad, other agencies.
  • Benefits of FCRA Registration.

Under Section 80G

  • The donor can avail deduction from its taxable income.
  • Attracts the donor to make a donation.

Enhanced Credibility

  • Obtaining these registrations enhances the credibility and transparency of nonprofit organizations, instilling trust among donors and stakeholders.

Financial Sustainability

  • Tax exemptions incentivize donors to contribute to charitable causes, thereby bolstering the financial sustainability of nonprofits and enabling them to expand their impact.

Document Required

  • Memorandum of Association (MOA) :A document that outlines the objectives and scope of activities of the nonprofit organization.
  • Articles of Association (AOA) :This document contains the rules and regulations governing the internal management and operations of the organization.
  • Certificate of Incorporation :Proof of the organization's legal existence, issued by the Registrar of Companies.
  • PAN Card :Permanent Account Number card issued by the Income Tax Department, which serves as an identification number for tax purposes.
  • Proof of Address :Document(s) confirming the registered office address of the organization, such as a utility bill or rental agreement.
  • Audited Financial Statements :Including audited balance sheets, income and expenditure statements, and auditor's reports for the previous three financial years.
  • Form 10G or Form 10 :The application form for seeking 80G or 12A registration, respectively, duly filled and signed by authorized signatories.
  • Details of Trustees or Board Members :Information about the trustees or board members, including their names, addresses, PAN cards, and Aadhaar cards.
  • Details of Activities :Description of the charitable activities undertaken by the organization, including the beneficiaries and geographical areas served.
  • Bank Account Details :Copy of the organization's bank account statement and cancelled cheque.

How to Obtain 80G and 12A Registrations

  • Assess Eligibility :Ensure that your organization meets the eligibility criteria specified under the Income Tax Act for 80G and 12A registrations.
  • Prepare Documentation :Gather all necessary documents, including audited financial statements, memorandum of association, articles of association, and details of charitable activities.
  • File Application :Submit the application for 80G or 12A registration to the relevant authority along with the required documents and fees.
  • Comply with Regulations :Maintain proper accounts and comply with reporting requirements to ensure the continued validity of your registrations.
  • Bank Account Details :Copy of the organization's bank account statement and cancelled cheque.

Eligibility

UNDER SECTION 12A

Charitable Trusts, Religious Trusts, Societies and Section 8 Companies Not applicable to the Private or family Trust.

UNDER SECTION 80G

Donation made to charities prescribed under category 80G.
The NGO shall be duly registered under the Act.

Process

Dully filled-in application

Dully filled-in application will be submitted to the exemption section of the lncome Tax Department.

Receive Notice

NGO will receive notice for clarifications from Income Tax Department in 2-3 months after applying.

Reply of Notice

Reply of notice will be submitted by the consultant along with all relevant desired documents to the Income Tax Departments.

Consultant will personally

Consultant will personally visit the Income Tax Departments to follow-up the case on behalf of the applicant organization.

Exemption Certificates

Exemption Certificates will be issued.

Frequently Asked Questions

What is section 12-A of Income Tax Act. ?

Income of an organization is exempted if NGO has 12-A registration. All income shall not be taxable after 12-A registration. This is one time registration.

If an organization has obtained certification under section 80-G of Income Tax Act then donors of that NGO can claim exemption from Income Tax. This is not one time registration. This needs to get renewed after validity period.

Application for registration under section 12A and 80G can be applied just after registration of the NGO.

Application for registration under section 12A and 8OG can be applied to the Commissioner of Income-tax (Exemption) having jurisdiction over the institution.

Yes, both applications can be applied together or it can also be applied separately also. If some organization is willing to apply both applications separately, then application for registration u/s 12A will be applied first. Getting 12A registration is must for applying application for registration u/s 80G of Income Tax Act.

If application for registration under section 12A and 80G will be applied through NGO Factory, it should take 3 to 4 months.

12A Registration : Lifetime validity
80G Registration : 1 to 3 years validity

12A Registration : Form 10A
80G Registration: Form 10G (For New Application and Renewal both)

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