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Overview of 12A and 80G

Overview of 12A and
80G Certification

\In India, 12A and 80G are certifications provided by the Income Tax Department to nonprofit organizations (NPOs) that allow them to receive tax exemptions on their income and donations received.
12A certification is given to NPOs that are established for charitable or religious purposes, and it allows them to claim full exemption on their income from taxes.

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80G certification is given to donors who make donations to eligible NPOs, allowing them to claim tax deductions on the donated amount. NPOs that have 80G certification are eligible to receive tax-deductible donations, which can help them attract more donors and funding.
Both certifications are important for NPOs as they can help them reduce their tax burden and increase their resources to carry out their charitable or religious activities. NPOs need to apply for these certifications and fulfill certain criteria to be eligible for them.

Benefit Of 12A and
80G Certification

The benefits of 12A and 80G certification for nonprofit organizations (NPOs) in India are:

Tax exemption:

12A certification allows NPOs to claim full exemption on their income from taxes, while 80G certification allows donors to claim tax deductions on the donated amount. This can help NPOs attract more donors and funding, as donors are incentivized to make tax-deductible donations.

Credibility:

12A and 80G certifications provide credibility to NPOs, as they have to fulfill certain criteria to be eligible for these certifications. This can help them build trust with donors, volunteers, and other stakeholders.

Access to government funding:

Many government schemes and programs require NPOs to have 12A and 80G certification to be eligible for funding. Therefore, having these certifications can help NPOs access government funding and support.

Administrative ease:

NPOs with 12A and 80G certification are eligible for certain administrative benefits, such as faster processing of their applications, reduced scrutiny, and exemption from certain compliance requirements. This can help them save time and resources, allowing them to focus on their charitable or religious activities.

Eligibility for Certification

Eligibility for 12A and 80G Certification

The eligibility criteria for 12A and 80G certification for nonprofit organizations (NPOs) in India are:

12A certification:The NPO must be registered as a trust or society or a nonprofit company under Section 8 of the Companies Act, 2013.
The NPO's activities must be primarily for charitable or religious purposes.
The NPO's income must be applied for charitable or religious purposes only. The NPO must maintain proper books of accounts and get them audited annually.

80G certification:The NPO must have 12A certification.
The NPO's activities must be primarily for charitable or religious purposes.
The NPO must not have any income that is not applied for charitable or religious purposes.
The NPO must maintain proper books of accounts and get them audited annually.
The NPO must have a valid PAN (Permanent Account Number) and a bank account.
The NPO must provide donors with a receipt or certificate for their donations. It is important to note that the eligibility criteria may vary slightly based on the state or jurisdiction where the NPO is registered. NPOs need to carefully review the requirements and fulfill them to be eligible for 12A and 80G certification.

Document required for 12A and 80G Certification

The documents required for 12A and 80G certification for nonprofit organizations (NPOs) in India are:

12A certification:

  • Registration certificate of the NPO under the relevant law (e.g., Trust Act, Societies Registration Act, Companies Act).
  • Memorandum of Association and Rules and Regulations (in case of a society).
  • Trust Deed (in case of a trust).
  • Certificate of incorporation and Articles of Association (in case of a Section 8 company).
  • PAN (Permanent Account Number) card of the NPO.
  • Proof of address of the registered office of the NPO.
  • Audited balance sheet and income and expenditure statement for the last three years.
  • Original and photocopy of the registration certificate under FCRA (if the NPO has received foreign funds).

80G certification:12A certificate of the NPO.

  • PAN (Permanent Account Number) card of the NPO.
  • Details of donors who have made donations to the NPO in the last three years.
  • Audited balance sheet and income and expenditure statement for the last three years.
  • Donation receipts or certificates issued by the NPO to the donors.
  • Proof of address of the registered office of the NPO.
  • The exact documents required may vary depending on the state or jurisdiction where the NPO is registered. NPOs need to carefully review the requirements and submit the necessary documents to apply for 12A and 80G certification.

Procedure of applying 12A and 80G Certification

The procedure for applying for 12A and 80G certification for nonprofit organizations (NPOs) in India is as follows:

Become registered with the appropriate authorities: Before submitting an application for 12A and 80G certification, the NPO must be registered under the applicable law (such as the Trust Act, Societies Registration Act, or Companies Act).

Prepare the necessary documents: The NPO must prepare the necessary documents required for 12A and 80G certification, such as registration certificate, PAN card, audited financial statements, and proof of address.

Apply to the Commissioner of Income Tax: The Commissioner of Income Tax (Exemptions) of the area in which the NPO is registered must receive an application from the NPO in Form 10A. The application should include all the necessary documents and information about the NPO's activities and finances.
Wait for the verification and inspection: After receiving the application, the Commissioner of Income Tax may verify the NPO's activities and finances and conduct an inspection of its registered office.

Receive the certification: If the NPO fulfills all the eligibility criteria and requirements, it will receive 12A and/or 80G certification from the Commissioner of Income Tax. The certification will be valid for a certain period and may need to be renewed periodically.
The exact procedure may vary slightly based on the state or jurisdiction where the NPO is registered. NPOs need to carefully follow the procedure and provide accurate information and documents to apply for 12A and 80G certification

PSR Compliance Assistance

There is no denying that securing 12A and 80G certification is an intricate affair that seeks adequate skill and a professional approach. Many mistakes occur in the documentation part that inherently leads to the cancellation of the Application. With PSR Compliance support at your disposal, you do not need to encounter such hassles. All you need to facilitate requested credentials and information to our expert, and you are good to go. Our experts will take care of all the formalities and ensure seamless delivery of Certification in a prompt time frame.

Frequently Asked Questions(FAQ's)

  • 01. What is 12A certification?
    12A certification is a registration given to non-profit organizations that allows them to claim exemption from paying income tax on their income and donations received.
  • 03. What is 80G certification?
    80G certification is a registration given to non-profit organizations that allows donors to claim tax benefits on the donations made to the organization.
  • 05. What is the eligibility criteria for 12A and 80G certification?
    The eligibility criteria for 12A and 80G certification include having a non-profit objective, not having any prohibited activities, maintaining proper books of accounts, and submitting annual reports and returns.
  • 07. What are the documents required for 12A and 80G certification?
    The documents required for 12A and 80G certification include PAN card, Aadhaar card, and address proof of the organization, Memorandum of Association and Articles of Association, registration certificate, financial statements, and other supporting documents as per the requirements of the concerned authority.
  • 09. How to apply for 12A and 80G certification?
    The application for 12A and 80G certification is filed with the Income Tax Department in the prescribed form along with the required documents and fees.
  • 02. What is the validity of 12A and 80G certification?
    The 12A and 80G certification are valid for a lifetime unless the organization’s objectives, activities, or legal status change, or if the certification is revoked by the concerned authority.
  • 04. Can a newly formed organization apply for 12A and 80G certification?
    Yes, a newly formed organization can apply for 12A and 80G certification after a minimum period of one year of its operation.
  • 06. What is the process of renewal of 12A and 80G certification?
    The renewal of 12A and 80G certification is done by filing an application with the Income Tax Department along with the required documents and fees before the expiry of the current certification

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