12A & 80g Registration in India

What is 12A & 80G Registration?

In India, two specific registrations offered by the Income Tax Department can prove to be of great benefit to non-profit organizations: 12A and 80G. The 12A registration allows non-profit organizations to be exempted from income tax on their income earned, which can help significantly in making the maximum amount of funds available for their charitable causes. Further, the 80G registration also provides a significant advantage to donors of such organizations in that they can claim a deduction in their taxable income for any donation given.

12A Registration

 12A registration is granted by the income tax department, it is one time registration for trusts and NGOs in India, it means when a trusts or a NGOS or institutions sets up its operations, it receives a tax rebate of 15% on its income. 12A registration is generally applied for incorporation.

The 12A registration facilities is available for all trusts and NGOs, so it is mandatory to be aware of 12A registration act of Income tax. The registration which is granted under 12A shall be treated as a one-time registration as once the registration is made, the registration will be active until the date of cancellation. This registration also allows to focus on goals without having burden of paying tax to the government.

 Eligibility for 12A

It is like in order to qualify for registration under section 12A, the organization should meet the definition of charitable purpose as defined in the income tax act. Charitable purpose means education of poor, relief to poor people,  medical relief and the activities undertaken with the objective of preserving the environment, also the 12A registration is not applicable for private and family trusts.

Annual returns must be filed regularly to the compliance of the income tax act and the Misuse of funds can lead to the cancellation of the Registration.

 80G Registration

Section 80G of the Income Tax Act, 1961 provides a provision through which individuals and organizations can get relief in income tax by availing deductions for donations made to eligible charitable organizations. When an organization gets a 80G certificate, it simply means that the organization is registered and recognized by the Income Tax Department as eligible to receive donations exempt from income tax.

Contributions made to such organizations by donors can be deducted from taxable income up to a specific limit, as per the amount donated, hence all NGOs should avail the advantage of these provisions to attracts potential potential donors. Section 80G is one of the such sections.

 Why should you get yourself registered in 12A and 80G.

1. There are much chances for the eligibility for government and CSR grants increases.
2. Many corporate and foreign donors prefer contributing to the tax organization.
3. There are much chances of getting benefits of funds and commissions.
4. NGOs save money on taxes and donors get tax deduction.
5. Eligibility for government and CSR grants increases.

 Documents needed for 12A & 80G registration

1. PAN Card
2. Trust Deed / Memorandum of Association (MOA) of trusts/societies
3. Registration certificate under relevant Acts (Trusts Act, Societies Act, Companies Act).
4. Pan and Aadhar details of Trustees/ Members.
5. Address proof of Registered office.
6. Financial Statements for the previous three years wherever available.
7. List of activities and welfare projects undertaken.

12A & 80G Registration Process

1. Submit a form 10A in case of fresh registration or form 10AB in the case of renewal.
2. Online submission on the Income Tax Department e-filing portal.
3. Verification by IT Department
4. Approval & Certificate Issuance: Once verified it is provided.

 Common mistakes to avoid during Application

1. Incomplete documentation can delay the process of registration.
2. Not maintaining the proper financial record.
3. File the renewal at least  6 months prior before expiry.
4. Not filing the annual returns, as its mandatory to maintain the registration. 

Conclusion 

Getting yourself registered in 12A and 80G registration is essential for NGOs and for all the charitable institutes looking to maximize tax. While all the documents requires  the careful documents and appliance. If you are planning yourself to register your NGO or trust, its advisable to seek guidance from professionals.

At Taxflick, we know how crucial it is to obtain Section 12A and 80G registrations for your nonprofit organization. We provide end-to-end support and guidance in the registration process so that you can receive the benefits and concessions offered under these sections of the Income Tax Act.