12AA & 80G Application

Registration Under 12A And 80G For NGO’s: Benefits To Look-Out For

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Registering an NGO in India is advantageous for many reasons. The chief of them being the rebate they get in income tax under two major section – the 80G and 12A. This post aims to explain the two in simple words for the benefit of NGO owners.

While Albert Einstein may have said that the hardest thing to understand in the world is Income Tax, this is an attempt to simplify one aspect of the Income Tax Act – the benefits available to NGOs. If you’re a proud founder of an NGO, a manager of its funds or a big-hearted donor, this article casts light on why registration of NGO in India under 12A and 80G and for the tax exemption is available and important.

Registration under 12A: The Stepping Stone

The foremost thing for an NGO to do is to seek an exemption certificate, which is known as a 12A registration. Without this registration process for your NGO in India, your receipts would be entitled to normal tax rates and the beneficial exemptions available would evade you. This society bylaw to register under 12A would also help you in seeking grants from government or organizations abroad, as it serves as a legitimate proof of the existence and purposes of your NGO. It is also noteworthy that regardless of whether the NGO is constituted as a trust, society or a not-for-profit company, it will have to seek a 12A certification to avail tax exemption.

Registration under 80G: Benefits

One of the major registration processes for an NGO in India is receiving registration under 12A. Once that is done the major benefit is that you can seek to register under 80G of the Income Tax Act. The advantage NGO registration confers is that the donor (that is the person donating money) to the NGO will no longer be taxed for donating to your NGO. The donors can use this registration to reduce the amount they donate to an NGO from their total taxable incomes. The circular benefit of this registration would be threefold:

  • As a society bylaw, 80G certification makes your NGO become a promising prospect and enhances the value of the organization and confidence of those associated with it.
  • It effectively enables a donor to not just feel good about making a donation for a cause but also reap the tax advantage of lowering taxable income associated with it. Well, who doesn’t like freebies?
  • Only an NGO registered under both 12A and 80G is eligible for availing government funding.
  • Getting an 80G registration also helps in seeking foreign contributions.

  • Procedure for registration under section 80G, 12A and 12AA.

    A non-governmental organization (NGO)that is neither a part of a government nor a conventional for-profit business. Usually set up by ordinary citizens, NGOs may be funded by governments, foundations, businesses, or private persons. NGOs are highly diverse groups of organizations engaged in a wide range of activities, and take different forms in different parts of the world. Some may have charitable status, while others may be registered for tax exemption based on recognition of social purposes. Others may be fronts for political, religious or other interest groups.

    In India, the various privileges are available to NGO/Charitable Trust’s in context of tax exemption. As per section 11 of income tax act, 1961 the NGO’s got various tax exemption benefits with respect to its income/donation, like:

    1. 15% of income/donation is blindly exempt whether or not the above income applied for charitable purpose;

    2. Voluntary contributions/donation made with a specific direction that they shall form part of the corpus of the trust is wholly exempt;

    3. Donor of NGO will get deduction with respect to the donation made to such NGO;

    4. and there is many mores.

    In order to avail such benefits, the NGO/ charitable trust has to register themselves with income tax under section 12A , Section 12AA & Section 80G of income tax act, 1961.

    Now, the question is how to register ??

    So the answer to this how is as follows :-

    First step Apply for PAN card, This will the birth of Trust in the eyes of Income Tax Department.

    Second step Compiled the given below documents for applying registration u/s 12A & 80G (both application can be apply together or separately also) :-

    1.Dully filled in Form – 10A for registration u/s 12A registration;

    2.Dully filled in Form – 10G for registration u/s 80G registration;

    3.Registration Certificate and MOA /Trust Deed (two copies – self attested by NGO head);

    4.NOC from Landlord (where registered office is situated, if rented);

    5.Copy of PAN card of NGO;

    6.Electricity Bill / House tax Receipt /Water Bill (photocopy);

    7.Short note on the activities of the trust and evidence of welfare activities carried out & Progress Report since inception or last 3 years;

    8.Books of Accounts, Balance Sheet & ITR (if any), since inception or last 3years;

    9.List of donors along with their address and PAN (If Any);

    10.List of governing body/board of trustee’s members with their contact details along with copy of PAN;

    11.Original RC and MOA / Trust Deed for verification (The same will be return to you after verification);

    12.Affidavit / undertaking by NGO Head.

    Third Step on compiling the above documents with covering letter, the responsible person shall submit the documents before Commissioner of Income Tax within which NGO jurisdiction lies.

    Fourth Step NGO will receive notice for clarifications from Income Tax Department in 2-3 months after applying.

    Fifth Step Reply of notice will be submitted by the responsible person of NGO along with all relevant desired documents to the Income Tax Departments.

    Last Step Exemption Certificates will be issued.

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