12A and 80G Registrations: Empowering Non-Profit Organizations

Non-profit organizations (NGOs) are essential for societal welfare, often relying on donations and grants to sustain their operations. To incentivize and streamline donations, the Indian Government provides tax benefits through 12A and 80G registrations.


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Overview

12A Registration: This registration under Section 12A of the Income Tax Act, 1961, provides tax exemptions on the income earned from donations and grants. It’s a mandatory registration for NGOs to benefit from tax exemptions on their income.

80G Registration: Under Section 80G, NGOs can offer tax deductions to their donors, thereby encouraging more contributions. This registration is voluntary and can only be obtained after securing 12A registration.

Legal Framework

Section 12A of the Income Tax Act: It exempts income from donations and grants for charitable purposes from being taxed. It ensures NGOs are not taxed on their income, which is directed towards charitable or religious activities.

Section 80G of the Income Tax Act: It allows donors to claim deductions on their contributions to NGOs. This section encourages more substantial donations by providing a tax incentive to donors.

Applicability

12A Registration: Applicable to trusts, societies, or Section 8 companies established for charitable or religious purposes. The organization must demonstrate that its activities are focused on charitable objectives and that no profit is distributed to individuals or groups.

80G Registration: Applicable to NGOs that have already obtained 12A registration. It ensures that donations made to these organizations are eligible for tax deductions under Section 80G, benefiting both the organization and its donors.

Documents Required for 12A and 80G Registrations

The main objective of 12A registration is to attain an exception from income tax payment.

Here is a checklist of documents required for 12A registration:

  • PAN Card copy of the NGO.
  • Trust Deed, if the applicant is a Trust.
  • List of the Board of Trustees.
  • Registration Certificate and MoA if the applicant is registered as a Society or Section 8 Company.
  • Form 10G if applying for registration under section 12A.
  • Address proof of the registered office.
  • No Objection Certificate (NOC) from a landowner in case the office is rented.
  • Utility bill copies Water Bill, Electricity Bill.
  • Books of account with the records of the last three years of operations or since the date of establishment including income tax returns.
  • Report on Welfare Activities undertaken in the last three years.
  • Bank account statement for the last three years.
  • List of donors with their PAN and address details.

80G Registration

80G registration creates a route for donors to enjoy tax deduction benefits. Here is a checklist of documents required for 80G registration:

  • PAN Card copy of the NGO.
  • Form 10A if applying for registration under section 80G.
  • Bank account statement for the last three years.
  • MoA & AoA if the applicant is registered as a Section 8 Company under the Companies Act 2013.
  • Trust Deed if the applicant is a Trust.
  • Registration Certificate and MoA if the applicant is registered as a Society or Section 8 Company.

Process of Required for 12A and 80G Registrations

The Process for 12A and 80G Registrations registration process includes the following steps:

  • NGO Formation: Choose the appropriate legal framework (trust, society, or Section 8 company) and register your NGO with the relevant authority.
  • Document Collection: Gather all necessary documents, including registration certificates, financial statements, and NGO Darpan ID.
  • Application Preparation: Complete Form 10A for both 12A and 80G registrations. Ensure accurate information regarding your NGO’s objectives and activities.
  • Application Submission: Submit the filled Form 10A along with supporting documents to the Income Tax Department either online or at the local office.
  • Review and Inspection: The tax authority will review your application and may inspect to verify compliance with registration requirements.
  • Registration Decision: Receive your registration certificate if your application is approved. Address any concerns if the application is initially rejected.
  • Registration Intimation: Obtain the official registration certificate confirming tax exemption status and eligibility for donor tax deductions.

Validity

Initial registrations under Sections 12A and 80G are provisional and valid for three years. Renewal must be applied for 6 months before expiry or within 6 months of starting activities. Renewed registrations are valid for five years.

Benefits of Sections 12A and 80G

  • Tax Exemptions for Donors: Contributions to registered NGOs are eligible for tax deductions, enhancing donor engagement.
  • Enhanced Credibility: Registrations add credibility and transparency to your NGO, fostering trust among donors.
  • Increased Fundraising: Tax benefits attract more generous donations, expanding your fundraising potential.
  • Access to Government Grants: Many grants require 12A and 80G registrations, providing additional funding opportunities.
  • Long-Term Sustainability: Tax incentives for donors support sustainable funding and long-term project execution.

Why Kickstart Business Advisors?

At Kickstart Business Advisors, we offer comprehensive support for obtaining 12A and 80G registrations. Our services include:

  • End-to-End Assistance: From eligibility assessment to application submission.
  • 100% Online Processing: Streamlined online process for convenience.
  • Full Documentation Support: Ensure all required documents are accurately prepared and submitted.
  • Expert Consultation: 24/7 consultation for any queries or issues.
  • Transparent & Affordable: Clear, cost-effective services with no hidden charges.

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