How to Register 12A and 80G Certificate to our NGO?

How to Register 12A and 80G Certificate

Non-governmental organizations in India are registered for many reasons and are also beneficial. Income tax exemption is available under its two major certificates – 80G and 12A. The purpose of this post is that non-governmental organizations will tell the owners in simple terms.

If you are associated with an NGO, you are the manager of its fund or the proud founder of a large donor. This article sheds light on why NGO registration under 12A and 80G is available in India and is important for tax exemption. Today we will learn about 80G and 12A in detail.

12A Registration

12A registration is an exemption received by most trusts at one time, including incorporation after the exemption from the inclusion of income tax. Section 8 Companies, trusts and NGOs that have 12A registration enjoy an exemption from paying income tax on the surplus income of the Trust or NGO. Income tax exemption is available to all non-profit non-governmental organizations. Therefore, all trusts, NGOs and other non-profit organizations should be aware of Section 12A of the Income Tax Act and get it soon after incorporating the trust or NGO. In this article, we look at the process of obtaining 12A registration in India.

Now that we’ve covered 80G registration, we’ll discuss 12A registration and 12A registration process.

12A is exempt from paying income tax on the basis of registration, trusts and NGOs and other Section 8 companies. NGOs are basically organizations for charitable and non-profit activities. However, they have income and if not registered under Section 12A of the Income Tax Act, they will have to pay tax as per normal rates. Section 12A of the IT Act, 1962 does not differentiate between charitable and religious trusts. Therefore the 12A registration applies to both types of organizations.

What are the benefits of Registration under Section 12A?

  • Income will be exempted from taxation.
  • An organisation registered under section 12A becomes eligible to receive government, Abroad and various private sector grants.
  • Benefits of FCRA Registration.
  • Organizations registered under 12A are also eligible for availing benefits under section 80G.

What is the Registration Process for Section 12A of Income Tax?

Eligibility:

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

Documents

The following documents are required for 12A Registration:

  • Documental evidence of the creation of the Trust or NGO {Trust Deed of a Trust; Registration Certificate and Memorandum of Association {MOA} of a society}
  • Section 8 companies need to submit a certificate of incorporation and copies of MoA and AoA of the company
  • Form 10A.
  • Three-year bank account statement of the Trust.
  • PAN of the organization.

Process:

It is a one-time registration process. Prior to applying for an exemption certificate under section 12A, the NGO shall get it’s NGO registered under the Income Tax.

  • The application shall be made in Form 10A to the Income Tax Commissioner.
  • The application shall contain the following documents:
    • List of name, address and Pan details of the trustees/managers;
    • A certified true copy of the instrument (registration certificate) under which the trust/institution was created/established;
    • A certified true copy of the document (Trust deed/MOA and AOA) which is evidence of such institution/trust creation;
    • Copy of PAN card of NGO.

80 Registration

80G Registration under Section 80G of Income Tax Act provides benefits to the donor of an NGO. The donor gets financial benefits in his taxable amount of their income. The 80G certificate is issued by the Income Tax Department to a non-governmental organization (NGO), a charitable trust, or a section 8 company. The 80G certificate is given to encourage such non-profit organizations to donate money. In addition, the donor gets a tax rebate of 50% on donating to such an organization, as they become eligible to withdraw such amount from their gross total income. Additionally, to avail the exemption, the donor will have to attach a stamped receipt of the donation made. Such receipt should contain the name of the donor, date of donation and PAN of the organization.

What are the benefits of Registration under Section 80G?

  • The donor can avail deduction from its taxable income.
  • Attracts the donor to make a donation.
  • Getting an 80G Registration also facilitates seeking foreign contributions.
  • Only an NGO with both 12A and 80G registration is eligible for government funding.
  • As a society bylaw, 80G registration makes your NGO a promising prospect, enhancing its goodwill and the confidence of those associated with your brand.

What is the Registration Process for Section 80G of Income Tax?

Eligibility:

  • Donation made to charities prescribed under category 80G.
  • The NGO shall be duly registered under the Act.
  • Following are the non-eligible for registration under 80G Certification:
    1. The charities with a religious or business angle.
    2. Nonseparation of Business and Charity account if the charity is involved in any business which does not account for donation alone.
    3. Tax benefits are not available to a donor who is donating to NGO which is not registered under 80G or funding for a political party or gifts made to trusts operating outside India.

Documents

The following documents are required for 80G registration is as follows:

  • MoA and Registration certificate in case of Section 8 companies and Societies and a Trust Deed in case of a Trust
  • No objection certificate from the owner of the property where the registered office of the Institution is situated
  • Form 10G
  • A copy of the PAN of the NGO
  • Copy of Utility Bills such as Electricity bill, water bill or House Tax Receipt
  • A list of the donors along with their address and PAN
  • The documents related to Income Tax Returns and the Book of Accounts of the past three years
  • The list of the welfare activities being carried out & the progress report of the last three years
  • A detailed list of the Board of Trustees
  • Original RC, MoA, or Trust Deed.

Process:

The prior requirement for getting registration under section 80G is obtained registration under Section 12A.

80G Registration Procedure Consists Of The Following Steps:

  • Apply for an 80G certificate to the Commissioner of Income Tax (Exemption) within the jurisdictional area of the entity along with the required documents.
  • An on-premise inspection is done by the Income Tax department after the form, and the required documents for 80G registration are submitted
  • However, the Income Tax Officials might ask for additional documents or evidence if they seem unfit, or if they feel anything is missing
  • Upon satisfactory verification of documents and the office of the NGO, 80G certificate is granted to the institution by the Commissioner.

The issue of a certificate under Section 80G of the Income Tax Act:

On receipt of an application, the Commissioner Scrutinize and may ask additional documents or information. After satisfaction of an application, the Commissioner may pass an order in writing registering the Trust/Institution under Section 80G of Income Tax Act. On non-satisfaction of an application, the commissioner may reject the application of an NGO. To avail the deduction the payment shall be made as specified under the law.

The registration process may take time up to 3 to 4 months. The Registration done once is valid for 5 Years.

How to Register an NGO?

The process of registration of an NGO in India is done in three ways. Or we can also say that NGOs can be registered in any of the three Acts. Let us know what are these three acts?

  • Trust Act
  • Society Act
  • Companies Act

Trust Act

There are Trust Acts in various states of India but if a state does not have a Trust Act, then the 1882 Trust Act applies in that state. It is necessary to have at least two trustees under this act. To register an NGO under this Act, you have to apply to the charity commissioner or registrar office. To register an NGO under the Trust Act, you need a document called a deed.

Society Act

Registration under the Act requires a Memorandum of Association and Rules & Regulations document, this document is very important. A minimum of 7 members is required to create this document. NGOs are registered as societies, but in the state of Maharashtra, NGOs can be registered as trustees in some states such as the Societies Act.

Section 8 Company Act

Memorandum and articles of association and regulation document are required for registration of an NGO under the Companies Act. No stamp paper of any kind is required to create this document, a minimum of three members are required to create this document. In this act, the NGO is registered under the Companies Act.

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