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About 12A & 80G

About 12A & 80G

12A Registration is the most initial step NGO’s need to follow to seek a Certificate of Exemption from Income Tax Department. It is important to note here that notwithstanding the fact that trust, society and section 8 companies are registered as per their respective acts, the registration under section 12A is necessary to claim exemption under Income Tax Act. Companies registered under Section 12A doesn’t need to pay income tax as they are exempted from it. Furthermore, 12A Certificate helps you to seek permission from the government and the organizations abroad as 12A Registration acts as a legitimate proof of your NGO’s existence.

About 80G Registration

80G Certificate is issued under Income Tax Act, 1961 to NGO’s by Income Tax Department. It is important to note that when registration is granted under section 12A, it does not mean that section 80G approval is to be given i.e. registration under section 12A will not provide automatic approval under section 80G. Section 80G applies only to charitable trusts or institution. It does not apply to religious trust or institutions. The primary objective behind the grant of 80G Registration is to motivate more donors to the organizations for donating funds. Furthermore, the donors receive a 50% tax exemption on his total taxable income. To avail this exemption, the donor must attach the stamped receipt against the donation issued by the NGO.

ADVANTAGES

Exempted Income

After getting 12A & 80G Certificate all the received income will be exempted from taxation.

Attracts Donors

After getting 12A & 80G an organization attracts the donor to make a donation.

FCRA

After getting 12A & 80G an organization can apply under the Foreign Contribution Regulation Act, 2010 or FCRA.

Government Grants

NGO’s receives various grants from government and other agencies. They are eligible to get grants and financial funding from various agencies. These agencies generally make grants to 12A registered NGO’s.

CSR Funding

For CSR funding it is mandatory to get registration certificate of 12A & 80G.

Donors get deduction

After getting 80G the donor can avail deduction from its taxable income after donation.

ELIGIBILITY FOR 12A & 80G

Not all NGOs or trusts are eligible for 12A & 80G registration. There are certain rules that need to be followed to obtain it. These have been listed below:

  • Charitable Trust, Religious Trust, Society, and Section 8 Co., that has been formed to provide benefits to the public.
  • Private or family Trusts are not eligible.
  • Donation made to charities that have been prescribed u/s 80G,
  • The NGO has been duly constituted as a Public Charitable Trust or registered under section 8 of the Companies Act, 1956. It may be a registered society or a Section 8 under the Companies Act’2013 or is a University established by law Or is any other educational institution recognized by the Government or by a University established by law. An affiliation to any University established by law. An institution financed wholly or partially by the Government or local authority.
  • Following are the details under which the government can reject your claim for an 80G certification:
    1. Separation of Business and Charity: If the entity is involved in any business/financial transactions that do not account for donations alone, you would have to keep both separate. Else, your business may not qualify for 80G registration.
    2. No Misuse: The donations received towards the cause must not be used for any other purpose, even within the organization. A strict accounting is mandatory.
    3. No Religious Activity: The charities involve religious preaching, or are done towards a particular caste or creed.
    4. Diversion of funds: If the NGO is found funding a political party or gifts are made to trusts operating outside India, your 80G certification request will get rejected.
    5. The registered trust/institution/ Section 8 Co. should not hold any Non-Exempt.

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Documents Required for 12A & 80G Registration

Documents Required for 12A & 80G Registration

  • PAN card of NGO.
  • Form 10A & 10G.
  • Certificate of Incorporation.
  • Memorandum of Association, if NGO is registered under Society or Section 8.
  • Trust Deed, in case the NGO is a Trust.
  • Copy of utility bills such as Water Bills, Electricity Bills or House Tax Receipt.
  • NOC (No-Objection Certificate) from the property owner, if the office is located on a rented property.
  • List of Board of Trustees & Members.
  • List of donors along with their PAN and complete address.
  • A complete list of welfare activities.
  • Photographs of work done by Organization.
  • The statement of accounts, Balance Sheet since inception or last 3 years whichever is less.
  • Evidence of welfare activities carried out & Progress Report since inception or last 3 years or whichever is less.

PROCESS

Step-1 : Duly Filed in Application

Dully filed in Application will be filed in Income tax Department.

Step-2 : Verification of Documents by Commissioner

The Commissioner will verify the Application along with the attached documents to check the authenticity of the information provided. If something is missing, he will ask for additional documents.

Step-3 : NOTICE

After 1-2 months of application an NGO will receive the notice for clarification.

Step-4 : VISIT INCOME TAX DEPARTMENT

Authorised Representative will visit Income Tax Department with all Documents and Clarification.

Step-4 : Certificate

After verification of all the presented documents you will get the certificate of 12A & 80G.

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