NGOs Must Apply For 12A And 80G Registration To Provide Income Tax Exemption To Donors And To Be Eligible For Government Funding.

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12A And 80G Registration

OVERVIEW OF 12A And 80G Registration

Only NGOs and Charitable Organizations fulfilling the following conditions can apply for 12A and 80G Registration:

  • They must not generate income from a business.
  • They must be either a charitable trust or a registered society.
  • These organizations must not utilize their assets or income for any purpose other than charity.
  • They must maintain a regular book of accounts detailing their receipts and expenses. maintained by them.
  • The trustees or governing body of the organization must not derive any undue benefits from these funds.
  • They must not work for the exclusive benefit of any specific caste or religion.
  • In the case of business-related income, the organization must maintain a separate book of accounts. However, donations received by the NGO cannot be used for such businesses.

An NGO must apply for 12A and 80G Registration immediately after its incorporation.

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What is an 80G Certificate?

The Income Tax Department issues an 80G Certificate to a non-governmental organisation (NGO) like a charitable trust or a Section 8 Company. This certificate aims to encourage donors in contributing funds to these non-profit entities. Moreover, donors qualify for a 50% tax exemption on their donations to such organisations, allowing them to deduct the corresponding amount from their Gross Total Income. To claim this exemption, donors must affix the stamped receipt of the donation they made. This receipt should include the donor’s name, donation date, and the organisation’s PAN.

About 12A Registration

Having covered the 80G Registration, let’s delve into Section 12A and the process of obtaining registration under Section 12A of the Income Tax Act, 1961.

Section 12A of the Income Tax Act, of 1961, offers a one-time tax exemption to trusts, NGOs, and Section 8 Companies. Entities with registration under Section 12A are spared from tax obligations on their surplus income.

NGOs, which engage in charitable and non-profit endeavours, generate income and must fulfil tax obligations at regular rates unless registered under Section 12A of the Income Tax Act.

DOCUMENTS REQUIREMENT

The following documents are necessary for 80G registration:

  • Memorandum of Association (MoA) and Registration certificate for Section 8 companies and Societies; Trust Deed for Trusts.
  • No objection certificate from the property owner where the Institution's registered office is located.
  • Form 10G.
  • A copy of the NGO's PAN.
  • Copies of Utility Bills such as Electricity bill, water bill, or House Tax Receipt.
  • List of donors with their addresses and PAN.
  • Documents pertaining to Income Tax Returns and Book of Accounts for the past three years.
  • List of welfare activities conducted and progress reports from the last three years.
  • Comprehensive list of the Board of Trustees.
  • ¬†Original RC, MoA, or Trust Deed.

For 12A registration, you need the following documents:

  • Provide documentary evidence of the establishment of the Trust or NGO (Trust Deed for a Trust; Registration Certificate and Memorandum of Association {MOA} for a society).
  • Section 8 companies are required to furnish a certificate of incorporation along with copies of MoA and AoA of the company.
  • Submit Form 10A.
  • Include a three-year bank account statement of the Trust.
  • Provide the PAN of the organisation.