12A and 80G
Registration
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What are the 12A and 80G Registrations in India – the details in below?
NGO (Non-Government Organization) is established as a non-profit Organisation in the form of Charitable Trust/Society/Section 8 Company and once such entity is formally registered it is approved for a bunch of tax exemptions, reliefs, benefits, as well as per provision of tax deductions for the donors. For that, 12A and 80G registrations are mandatory for any income an NGO earns, like, service/production/donation, which will be taken as normal taxable income without considering the purpose of such income.
What is 80G Certificate?
The Income-tax department is issued an 80G Certificate to a non-profit organization/entities or non-governmental organizations (NGO), a charitable trust, or a Section 8 Company by the Income Tax Department. The main object of NGOs in the 80G certificate is to provide more and more donors to donate their funds to such Organizations/Entities. The benefit that the donor will avail from donating to such an NGO is that he gets an income tax exemption on 50% of his donation as the donor is allowed to deduct their donations from the gross total income earned by NGOs. To avail of the exemption under the income tax Act, 1961 the donor needs to attach the stamped receipt against the donation that is issued by the NGO – the receipt needs to include the name, date, and PAN Number of the organization/entities.
What is 12A Registration?
Now that we have covered 80G Registration we will discuss 12A registration and 12A registration process.
By virtue of the 12A registration, Trusts and NGOs and other Section 8 companies enjoy exemption from paying income tax. NGOs are basically organizations that are meant for charitable activities and non-profit activities. However, they do have income and would be required to pay tax as per normal rates of the income tax if not registered under section 12A of the Income Tax Act. Section 12A of the Income-tax, Act, 1961 does not differentiate between charitable and religious Trusts, Societies, and Section - 8 companies Hence the 12A registration is applicable to both kinds of organizations.
80G Registration and 12A Registration is applicable only to NGO's and charitable organizations that:-
- Have no income are being generated from the business.
- Is either a charitable trust/entity, a registered society or a Section 8 companies.
- Should not be using their assets or income for any other than the purpose of a charitable trust, Section 8 companies, and other entities, or a registered society.
- To maintain a regular book of accounts of their receipts and expenses.
- The trustees/Members of the governing body of the organization/entity are not deriving any undue benefit from these fund.
- They should not be working to benefit of any particular caste or religion.
- If there is business income is being generated, there should be separate accounts maintained for it. The donations received by the NGO should not be used for such businesses other than the purpose of the object.
ADVANTAGES/BENEFITS OF 12 A and 80 G
TAX EXEMPTION
By claiming this exemption the NGO, Section 8 company and Society would get exempted from paying tax. For this purpose the NGO would have to furnish the 12A certificate to claim such exemption.
By taking the exemption certificate available under 12A an entity such as an NGO, Section 8 company and Society can avail all forms of schemes and grants provided by the government. This would not be available if the NGO, Section 8 company and society does not consider this form of registration.
Having 80G registration certificate would make the entity more reputed in the public. This certificate enables the donors to secure some form of exemption and paying less tax when it comes to donating to the particular NGO. Hence this certificate is useful for the donor also.
Other thing is that this form of certificate would be applicable not only for NGOs; it would also be available for societies which are registered as per the requirement of the Societies registration Act and Section 8 company registered under the Companies Act, 2013.
DOCUMENTS REQUIRED
- Registration certificate and MoA and AOA in case of Section 8 companies and Societies; Trust Deed in case of a Trust.
- No objection certificate from the owner of the property where the registered office of the Institution is located.
- PAN card copy of the NGO.
- Copy of Utility Bills – Electricity bills, water bills or House Tax Receipt.
- Donor list along with their complete address and PAN.
- Book of Accounts & Income Tax Return documents, of last three years.
- List of welfare activities being carried out & the progress report for last three years.
- Detailed list of the board of trustees.