12A and 80G Certification: A Step By Step Guide

In India, non-government organizations (NGOs) refer to any association not directly or indirectly under the control of the government involved in charitable activities. However, three organizations need compulsory registration: trust and societies, Section 8 Company Registration. Organizations get funds from donations and are thus referred to as non-governmental organizations because they do not get government funds. It benefits both because NGOs relieve the burden of paying taxes on the donated amount, while the donors can show it and benefit from the tax credit.

Both have online registration, but formalities must be fulfilled regarding the registration process. This blog explains the procedure through which the 80G and 12A registration can be availed and all the tax benefits that come with it.

What is 12A and 80G Registration?

12 A and 80G Registration is a vital tax provision allowing charitable institutes to obtain tax exemption and benefits. However, this section is regulated by Section 12A and 80G of the Income Tax Act 1961:

80G Certification

80 G certificate is granted to motivate the donors to donate funds to NGOs. For this contribution, the donor will be entitled to an exemption of 50% tax and a credit out of the gross total income. However, for the donor to qualify for this exemption, the receipt includes the donor's name, PAN number of the organization, and date of donation. It is a voluntary registration only available after 12A Registration.

12A Registration

After registering under section 12A, an NGO becomes eligible for tax exemption on its income, which means it doesn't need to pay tax on surplus revenue generated from grants, donations, and charitable purposes. This registration is crucial for NGOS because it maximizes the profits available for their activities.

Documents Needed for 12A and 80G Registration

Completing the NGO registration process and providing complete documents to verify the legal Registration is mandatory to register successfully. However, failure to comply with the documents results in the application being considered incomplete and even rejected by the authorities. Below, we mention the detailed list of documents required for 12A and 80G registrations in India:

• Statement of the bank account of the organization • Activity list carries out by the organization • PAN card of the organization • Last three years, audited accounts of the company • Memorandum of Association and Article of Association • Trustees, members, and directors name • Society, Section 8 Company and Trust registration certificate

80G and 12A Registration Process

According to a new amendment introduced under the Finance Act of 2020 and 2021, form 10A is considered a primary application for availing Registration under 12A and 80G of the Income Tax Act. Here, we elaborate on the updated 12A and 80G registration online processes with step – by – a step-by-step guide.

1. NGO Formation and Registration

Start by deciding the legal structure of the NGO and select between a trust, a Section 8 company, and society based on state regulations. After determining the legal framework, register your organization with the company's Registrar, trust, society, and other governing bodies.

2. Document Collection

Gather the documents required to file under 12A and 80G registration applications in Form 10A. The documents include an organization registration certificate, MOA, trust deed, audited financial statement, FCRA registration, NGO Darpan ID, etc. These documents will prove the existence and legitimacy of NGOs.

3. Application Preparation

It is necessary to fill out the official registration form 10A to apply for Registration under sections 12A & 80G of the Income Tax Act. This form is available on the official website of the Income Tax Department or obtained from the local Income Tax Office.

4. Application Submission

Enclose the documents to the Office of the Income Tax Commissioner or on the Income Tax Website through the adequately completed Form 10A. This is your official start to your 12A/80G registration process, though the process will continue for the next six days. It is advisable to keep all the copies of the documents submitted before you for future use.

5. Review and Inspection

After scrutinizing the contents of your application, the tax authority will analyze your registration application to see that your NGO/Charitable organization met all the requirements and complied with Section 12A/80 G registration. They may sometimes decide to inspect your organization's activities, including your financial statement, to establish credibility.

6. Registration Decision

If the application is successful and complies with all necessary standards, NGOs will grant Registration under Section 12A and 80G. If any error occurs, the application can be rejected, but you have a chance to address the issue.

7. Registration Intimation

After successful Registration, you will receive an official registration certification from the tax department.

Conclusion

Legal registrations under Section 12A and 80G of the Income Tax Act are mandatory for non-profit organizations as they entitle the donors to claim tax exemptions on the donations made to the organization. The following is a step-by-step guide to help an organization follow the necessary Registration procedures effectively and meet the expectations of the regulating authorities. These registrations are beneficial to NPOs by giving them a chance to generate funds. It also promotes generosity in society, developing their spirit of responsibility towards society and helping those in need.

Related Blog:

Read more: How to Register a New Company in Delhi?

Read more: Private limited company registration in India

Read more: 12A and 80G Registration -Process and Procedure

Read more: Step-by-Step Process for NGO Registration in India 2024

Read more: Section 8 Company Registration - Start with PSR Compliance