Introduction to 12A and 80G
Certificate Issued under Section 12A of the Income-tax Act, 1961, it grants tax exemption to Non-Governmental Organizations (NGOs) and charitable institutions. This ensures that the income generated by the organization is not subjected to taxation, promoting their philanthropic activities and Certificate Granted under Section 80G allows donors to claim tax deductions for contributions made to registered NGOs, encouraging financial support for charitable causes.
Applicability of 12A Registration and 80G Registration
Section 12A and 80G registrations are applicable under the Income-tax Act, 1961, for NGOs and charitable organizations.
Section 12A provides exemption from tax for NGOs, ensuring tax benefits for their activities
Section 80G allows donors to claim deductions for contributions made to registered NGOs, encouraging philanthropy
12A and 80G Registration procedure are required to be done after NGO is incorporation
What is a 12A Certificate?
After the NGO is incorporation, they have to register as per Section 12A of the Income Tax Act for claiming exemption under Section 11 and 12 of the Income Tax Act. Section 12A allows non-profit entities to claim full tax exemption as per Section 11 and 12 of the Income Tax Act, 1961, i.e. Non-Profit Organizations, Charitable Trusts, Religious Institutions Welfare Societies, etc.
If any non-profitable trust or NGO fails to registered for 12A, their financial receipts or transactions would be taxable. Any family or private trusts are not allowed such exemptions and cannot obtain 12A registration.
12A Registration Process
1. The NPO (Non Profitable organization) required to first get a registration certificate from the government. Application of Registration can be done to the Registrar of Societies in the state where the NPO is located.
2. Once the NPO has a registration certificate, then they can apply for 12A registration. The application form is available on the Income Tax Department website.
3. The application form must be supported by the following documents:
A copy of the NPO's(Non-profit organization) registration certificate
A copy of the NPO's constitution
A copy of the NPO's audited financial statements
A statement of the NPO's charitable activities where the NPO's registered office is located, a no objection certificate from the owner of the property
4. After the application is reviewed by The Income Tax Department, once NPO meets with the eligibility criteria they will issue the certificate.
Registration of 12A & 80G registration can be done through online or offline mode.
Benefits of 12A Registration
Governments and international organizations grant
Registration certificate serves as valid proof of the purpose of the NGO and its operations
All NGOs, trusts, or societies, companies, are eligible to avail exclusion from taxes
FCRA registration benefits
Documents Required for 12A Registration
The 12A certificate is considered a legitimate document to prove the existence of your organisation. This can help secure funds from the government and international organizations . However, if the organisation fails to obtain a 12A registration certificate, it won’t be able to avail of the benefits of tax exemption.
Proof of Incorporation of NGO
PAN Card of registered applicant of NGO
Trust Deed (in case of a Trust) or MoA ,AoA or Section 8 Company
A duly filled application form
Consecutive 2 years Financial Statements
What is an 80G Certificate?
80G is a certificate that exempts from paying taxes, to the donor. Donations to charitable trusts, section 8 company or organizations that are registered to exempt from taxes. The 80G certificate aims to encourage philanthropy by allowing donors to claim deductions on their taxable income for the amount donated to eligible organization.
Benefits of 80G Registration
80G certification increase the prospects and reliability of any organization
Donors obtain the benefits of less taxable incomes
Possibility of attracting more donors
Eligibility to get government funds
NGO owners can look for foreign contributions without any inconvenience
80G Registration Process
1. The NPO (Non-profit organization) must first get a registration certificate from the government. Application of Registration can be done to the Registrar of Societies in the state where the NPO is located.
2. Once the NPO has a registration certificate, they can apply for 80G registration. The application form is available on the Income Tax Department website.
3. The application form must be supported by the following documents:
A copy of the NPO's(non –profit organization) registration certificate
A copy of the NPO's constitution
A copy of the NPO's audited financial statements
A statement of the NPO's charitable activities where the NPO's registered office is located, a no objection certificate from the owner of the property
4. After the application is reviewed by The Income Tax Department, once NPO meets with the eligibility criteria they will issue the certificate.
Registration of 12A & 80G registration can be done through online or offline mode.
Documents Required for 80G Registration
Address proof of registered office of NGO
Provide Property Papers, if you own the registered office.
In case of rented office, provide Rented or Leased Agreement of the same
List of donors along with their PAN and Address
List of governing board of trustee’s members along with their contact details.
Proof of Incorporation of NGO
PAN Card of registered applicant of NGO
Trust Deed (in case of a Trust) or MoA, AoA or Section 8 Company
Conclusion
Obtaining 12A & 80 G certificate is essential for non-profit organizations to receive tax benefit and exemption from tax rates. Application of 12A and 80 can be applied together or separately. If any NGO or Organization fails to registered themselves under 12A and 80G they have to bear the taxes and would not be able to prevail the exemption of taxes from the government.
We at eStartIndia provide meticulous assistance to the clients incorrectly filing the 12A and 80G Registration for NGO as per the rules.
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