Overview

80G and 12A registrations only apply to NGOs and charitable organizations if they meet the following conditions:

• They should not have any income generated from the business
• They must be either a charitable trust or registered society
• Further, such organizations should not use their assets or income for any other purpose than donating them
• In addition, they should maintain a regular book of accounts in favor of their receipts and expenses.
• The trustees or any other body operating the organization should not be involved in obtaining any undue benefit from these funds
• They should not work for the benefit of any particular caste or religion
• Also, in case of business related income, the organization should maintain a separate book of accounts. However, donations received by NGOs should not be used for such businesses.

An NGO has to apply for 12A and 80G registration immediately after its joining.

About the 80G certificate?

An 80G certificate is issued to a non-governmental organization (NGO) by a charitable trust, or a Section 8 company such as the Income Tax Department. The 80G certificate is given to encourage such non-profit organizations to donate money. In addition, donors receive a tax rebate of 50% on donations to such an organization, as they become eligible to withdraw such amount from their gross total income. Additionally, to avail the exemption, the donor will have to attach a stamped receipt of the donation made. Such receipt should include the name of the donor, date of donation and PAN of the organization.

About 12A registration

Now that we have covered 80G registration, we will know about Section 12A and how to register under Section 12A of Income Tax Act, 1961.

Section 12A of the Income Tax Act, 1961 is a lifetime tax exemption provided to trusts, NGOs and Section 8 companies. Organizations registering under Section 12A are exempted from paying tax on their surplus income.

Non-governmental organizations are organizations involved in charitable and non-profit activities. However, they earn income and have to pay tax as per normal rates if not registered under Section 12A, Income Tax Act.

Required documents for 80G registration

80G registration requires the following documents:

• Section 8 Companies and Societies and Trusts in the case of trusts MoA in the case of trusts and certificate of registration / li>
• NOC from the owner of the property where the institute's registered office is located
• Form 10G
• A copy of the NGO's PAN
• Copy of utility bill like electricity bill, water bill or house tax receipt
• A list of donors with their address and PAN
• Documents related to last three years income tax returns and ledger accounts
• List of welfare activities & amp; Progress Report for last three years
• A detailed list of Board of Trustees
• Original RC, MoA, or Trust Deed.

Required documents for 12A registration?

12A registration requires the following documents:

• Documentary evidence of the creation of a trust or NGO {trust of trust; Registration certificate and memorandum of association of a society {MOA}
• Section 8 companies are required to make certificates of incorporation and copies of MoA and AoA of the company
• Form 10A.
• Trust's three-year bank account statement.
• Organization PAN

80G registration process

The 80G registration process consists of the following steps:

• Apply for 80G certificate to the Commissioner of Income Tax (Exemption) in the jurisdiction of the unit with the necessary documents.
• The form is followed by on-premises inspection by the Income Tax Department, and documents required for 80G registration are presented
• However, Income Tax officials can ask for additional documents or evidence whether they seem ineligible, or if they believe anything is missing
• The 80G certificate is given to the institution by the Office of the Commissioner and the NGO for satisfactory verification of the documents.

Note:  

The validity of the 80G certificate is for the lifetime of the institution.

Procedure for registration 12A

You must follow these steps for 12A registration:

• As per Rule 17A of the Income Tax Act, 1961, you have to file an application in Form 10A.
• The application has to be filled as per the guidelines of Commissioner of Income Tax (Exemption).
• When he receives the form and documents, the commissioner confirms the genuineness of the organization's activities. In addition, he can call for additional documents or information if he is a necessary
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• On satisfactory report, the commissioner passes an order in writing for the grant of 12A registration. If the Commissioner is not satisfied, he will reject the application, after which the applicant will be provided with a reasonable opportunity of hearing.

12A registration can be canceled at any time, subject to proof that the organization is involved in the following activities:

• is against the object of the institution
• not real
• To benefit a particular religion or caste
• Funds are being invested in prohibited instruments
• The income of the institution is used for the benefit of a specific person or group of individuals

Note:   12A registration is valid for the lifetime of such institution