COMPLETE PROCESS OF REGISTRATION UNDER 12AA & 80G
|DOCUMENTS| PROCEDURE| REQUIREMENTS

INTRODUCTION:

In India, Non-Governmental Organisations (NGOs) are of various types, such as Trust, Society, and Section 8 Company, which are registered under the Trust Act, Society Registrations Act, and the Companies Act in different states respectively.

The purpose of an NGO is to serve non-profit humanitarian purposes in the form of Trust, Society, and Section 8 Company. Once such a non-profit entity gets registered, it can avail of several tax benefits. Different kinds of tax exemptions, reliefs, tax deductions, and compensations are provided to the said entity and to the donors as well. To avail of these benefits, registrations under Section 12AA and 80G are compulsory. Otherwise, whatever the income an NGO earns through the sale of different goods or services, grants, and/or donations, will be treated as a normal taxable income, and this won’t consider the purpose of such income.

To get an exemption from income tax, an NGO should get itself registered under Section 12AA of the Income Tax Act. It is to be noted that registration under Section 80G of the Income Tax Act provides tax benefits to the donors of an NGO.

12AA REGISTRATION:

Generally, most Trusts get itself registered under Section 12AA of the Income Tax Act to be exempted from paying income tax right after the incorporation. This is a one-time exemption obtained by them. The benefit of income tax exemption is applicable for all non-profit entities. Section 12AA registration is not applicable for Private or Family Trusts. Charitable trusts, religious trusts, companies, etc., which come under Section 8 of the Company Act, 2013 these are eligible for 12AA Registration. 

For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.

DOCUMENTS REQUIRED FOR 12AA REGISTRATION:

For a 12AA registration, an applicant needs to submit the following documents in Form 10A-

1. The first and foremost document for 12AA registration is Form 10A,

2. Certified copy of the instrument under which the trust or Institution was created,

3. Certified copy of the document which shows proof of the creation of the trust or the establishment of the Institution,

4. PAN of the organization,

5. Certified copy of Registration with RoC/Registrar of Firms & Societies/Registrar of Trusts,

6. Certified copy of the documents which shows proof of adoption or modification of the objects, 

7. Certified copy of the annual reports of the trust or Institution for a maximum of three immediately preceding financial years,

8. Three-year bank account statement of the said trust or Institution,

9. Certified copy of existing order which grants Registration under Section 12AA or Section 12AA,

10. Certified copy of the order of rejection of application for grant of Registration under Section 12AA or Section 12AA.

PROCEDURE TO OBTAIN REGISTRATION UNDER SECTION 12AA:

a.   The applicant is required to submit the application in the required format online. Once the application has been submitted, the Commissioner may request the applicant to submit additional information or documents, if needed. The Commissioner may make such a request in order to satisfy the Income Tax Depart. about the genuineness of the activity(ies) undertaken by the trust.

b.  Once the Commissioner gets satisfied with the application, he will pass such written order mentioning that the Assessee is eligible and shall be provided Registration under the said Act. The written order is forwarded to the Assessee. After receiving the receipt of the order, the Assessee is entitled to obtain the privilege of Registration under the said section.

c.   When the Commissioner is not satisfied with the application, in that case, he has the right to reject the application straight away. The Assessee will be informed in writing of the reason for the rejection of his application.

For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.

80G REGISTRATION:

80G is a certificate which exempts an applicant partly or fully from paying taxes if the applicant has made donations to charitable trusts or section 8 company or organizations that are registered to offer exemptions from taxes. Any charitable organization or trust registered under Section 12AA allows the applicant to avail tax exemption under Section 80G. There is a maximum deduction criteria allowed. The criterion is, if the aggregate of the amount an applicant donates exceeds 10% of the total gross income, then the extra amount will not qualify for any kind of tax benefit. 80G certificates is an important tax-saving certificate.

DOCUMENTS REQUIRED FOR 80G REGISTRATION:

For an 80G registration, an applicant needs to submit the following documents in Form 10G-

  1. The first and foremost document for 80G registration is Form 10G,

2. Registration certificate and Memorandum of Association (MOA) in case of Section 8 company or Societies or a Trust Deed in case of a Trust,

3. No objection certificate (NOC) from the owner of the property where the registered office of the said Institution is situated,

4. Photocopy of the PAN of the NGO,

5. Photocopy of the electricity bill, water bill, or tax receipt,

6. List of donors,

7. Identity proof and PAN of the list of donors,

8. Income tax return receipts and the book of account of the last three years,

9. List of board of trustees and their details,

10. A list of welfare activities which are being carried out in the organization and the progress report of the said organization for the past three years,

11. Original Registration Certificate (RC), Memorandum of Association (MOA), and/or Trust Deed.

PROCEDURE FOR AN 80G REGISTRATION:

The stages for the purpose of 80G registration are as follows-

  1. The first thing to do is to apply for the 80G certificate to the Commissioner of Income Tax, along with the required documents.
  2. After the formation of the said Institution, an on-site inspection is done by the Income Tax Department, and then the required documents for the Registration are submitted,
  3. The income tax officials may ask for some additional documents or evidences for their perusal,
  4. After the verification and satisfaction of the additional documents, the Institution gets the 80G certificate for the Institution by the Commissioner.

80G REGISTRATION CAN GET CANCELED IN THESE CASES-

  1. When an NGO runs the promotion or benefit for the purpose of religion, caste, community, etc.
  2. When NGO receives funds or gifts from political parties or international sources.
  3. When NGO stars working as a commercial profit-based organization.
  4. Under NGOs’ operational activities, no member is allowed to make commercial profit-based activities. There should be separate books of accounts for such income.
  5. Any kind of misuse of 80G provision can lead to the cancellation of services.

Both Sections 12AA and 80G of the Income Tax Act, the application can be applied together jointly or separately. If an applicant wants to apply those applications separately, then an application under Section 12AA should be applied first. To apply for Registration under Section 80G, it is necessary to get Registration under 12G.

ELIGIBILITY FOR 12AA AND 80G REGISTRATION:

  1. NGOs which are working as Public Charitable Trust or under Section 8 of the Company Act, 2013, working for the public welfare are allowed to apply under this provision,
  2. Donations that are permitted under Section 80G is allowed for tax exemption,
  3. NGO assets should be used for charitable purposes only,
  4. NGOs should properly maintain books of accounts for the purpose of expenditures and receipts.

BENEFITS OF 12AA AND 80G REGISTRATION:

  1. More capital is allowed for charitable activities through tax exemption.
  2. Funds and grants are allowed from recognized agencies, Government, and International sources.
  3. Only a Section 12AA and 80G, registered as NGOs, are allowed to accept International funding with exemptions available under the Foreign Regulation Act, 2010 or FCRA.
  4. Both of these Attracts more donors, expanding the scope of fulfilling the NGO objectives.
  5. When the NGOs get registered and obtain 12AA and 80G registration, operational exposure and status value get increased.
  6. Both the 12AA and 80G registration are one-time registrations and valid upto the lifetime of an NGO.

Conclusion:

This is why NGOs which are working as Public Charitable Trust or other non-profit organizations are advised to get themselves registered under the Section 12AA and 80G of the Income Tax Act to retain the status of non-profit entities and to enjoy several benefits regarding tax. Such applications can be applied just after the formation and Registration of the said NGO. Both these applications are applied to the Commissioner of Income Tax (Exemption), having jurisdiction over the said Institution. 

For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.