12A and 80G Registration
Non-profit organizations (NGOs) in India, including trusts, societies, and Section 8 companies, rely heavily on donations and grants to fulfill their charitable objectives. To encourage these contributions and to receive tax exemptions on their incom
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What is 12A and 80G Registration?
Non-profit organizations (NGOs) in India, including trusts, societies, and Section 8 companies, rely heavily on donations and grants to fulfill their charitable objectives. To encourage these contributions and to receive tax exemptions on their income, NGOs need to obtain registrations under Section 12A and Section 80G of the Income Tax Act, 1961. For any NGO in India, these two registrations are the bedrock of financial stability and fundraising success.
Section 12A registration grants income tax exemption to NGOs on their surplus income. Without this registration, any income generated by the NGO, including voluntary contributions (even from donations or grants), would be taxable as per standard rates. It essentially certifies that the organizations income is applied for charitable or religious purposes, and therefore, is exempt from tax.
Note:Since 2020, Section 12A has been replaced by Section 12AB. All NGOs must re-register under Section 12AB to continue enjoying their tax exemptions.
Section 80G registration, on the other hand, provides a tax benefit to the donors of the NGO. When an organization has an 80G certificate, individuals or entities donating to it can claim a deduction (either 50% or 100%, depending on the donee institution and type of donation) from their taxable income. This encourages more people to donate. However, this benefit has rules under Section 80G(1) of the Income Tax Act.
The key differences between 12A and 80G registration are outlined below:
While 12A registration grants tax exemption to the NGO, 80G registration is crucial for attracting donors. Many potential donors, especially individuals and corporations, look for 80 G-certified organizations to avail of tax benefits.
Eligibility Criteria
Charitable or Religious Purpose:The organization must be established for charitable or religious purposes as defined under Section 2(15) of the Income Tax Act. This includes relief of the poor, education, yoga, medical relief, preservation of the environment, preservation of monuments, and the advancement of any other object of general public utility.
Non-Profit Motive:The organization must operate on a non-profit basis, meaning no part of its income or assets should directly or indirectly benefit its members, founders, or trustees.
Proper Books of Accounts:The NGO must maintain regular and proper books of accounts and records of its receipts and expenses.
Primarily Charitable Activities:While commercial activities are permitted, they must be incidental to the main charitable objects, and separate books of accounts must be maintained.
Registration:The organization must be properlyregistered as a Trust, Society, or Section 8 Company under the relevant laws.
No Benefit to Specific Community/Caste:The NGO should not be working for the benefit of any particular religious community or caste.
Registered under the Indian Trusts Act, 1882, or any other relevant state law.
The trust deed must explicitly state the charitable objectives.
Registered under the Societies Registration Act, 1860, or any other relevant state law.
TheMemorandum of Association (MoA)andArticles of Association (AoA)should clearly outline the charitable objectives.
Documents Required
Registration Process
12A and 80G Application Forms and Their Timelines
The application for 12A and 80G registrations, as well as their renewals, is done through specific forms with defined timelines:
Fees & Charges
| Fee Component | Amount |
|---|---|
| The complexity of the case. | Contact for pricing |
| The professionals level of experience will impact the fees. | Contact for pricing |
| Included services affect the cost, such as document preparation, online filing, and follow-up with the department. | Contact for pricing |
| Digital Signature Certificate (DSC):Needed for online filing. The cost usually ranges from Rs. 500 to Rs. 2,000, depending on the type and provider. | Contact for pricing |
| Notarizing Documents:Fees for notarizing trust deeds, MoAs, or other legal papers typically range from Rs. 50 to Rs. 500 per document, based on the notary and location. | Contact for pricing |
| Courier Charges:If any physical documents need to be submitted or sent. | Contact for pricing |
Key Advantages
1. Complete Income Tax Exemption
With 12A registration, an NGOs income, primarily derived from donations, grants, and other charitable activities, is exempt from income tax. This allows the organization to utilize a greater portion of its funds directly for its objectives.
2. More Donations and Building Trust
The 80G certificate acts as a significant incentive for donors. Knowing they can receive a tax deduction (50-100%) for their contributions encourages more individuals and corporations to donate, leading to increased funding for the NGO. It also builds trust and credibility as it signifies government
3. Eligible for Government Grants and Official Funding
Many government schemes (such as the Rashtriya Madhyamik Shiksha Abhiyan and the National Rural Livelihood Mission) and official funding opportunities require NGOs to be registered under both 12A and 80G. This shows the organization is legitimate and charitable.
4. Corporate Social Responsibility (CSR) Funds
Corporations often allocate a portion of their profits toward CSR activities. Companies typically prefer to partner with NGOs that have 80G registration, as it allows them to claim tax benefits on theirCSR contributions.
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