Apply Online for 12A and 80G Registration

In India, non-profit organizations can significantly enhance their financial capabilities through two vital registrations offered by the Income Tax Department: 12A and 80G. The 12A registration allows non-profits to enjoy exemptions from income tax on earnings, enabling them to maximize funds available for their charitable initiatives. Simultaneously, the 80G registration provides a valuable incentive for donors, as they can claim deductions on their taxable income for contributions made to these organizations.

At startupa2z.com, we recognize the critical role that Section 12A and 80G registrations play for your non-profit organization. Our team offers thorough support and expert guidance throughout the registration process, ensuring you access the benefits outlined in the Income Tax Act.

What are 12A & 80G Registrations?

12A and 80G registrations are essential tax provisions for NGOs in India, allowing charitable institutions to take advantage of specific tax exemptions and benefits. These registrations are governed by Sections 12A/12AA and 80G of the Income Tax Act of 1961:

12A Registration

This registration is conferred under the Income Tax Act of 1961 to non-profit organizations. Upon securing 12A registration, an NGO becomes eligible for tax exemption on its income, meaning it does not have to pay tax on surplus funds derived from donations, grants, or other revenue streams as long as these funds are utilized for charitable purposes. This registration is pivotal for NGOs, as it aids in maximizing the funds available for their operations.

80G Registration

While 12A registration is beneficial to the NGO, 80G registration serves to incentivize donors. It allows individuals or entities that contribute to a 12A-registered NGO to claim a deduction on their income tax. This deduction represents a percentage of the donation amount and can significantly lessen the donor's taxable income. The aim of this provision is to foster increased donations by offering financial benefits to contributors.

Both registrations enhance the ability of NGOs to attract funding by providing fiscal advantages to both the organizations and their benefactors.

Who Can Apply for 12A and 80G Registration?

The following organizations are eligible to apply for 12A and 80G registration:

• Charitable Trusts: Established for charitable purposes.
• Registered Societies: Formally registered under the Societies Registration Act or similar state laws.
• Section 8 Companies: Incorporated under Section 8 of the Companies Act 2013 with a focus on charitable activities.
• Religious Organizations: Groups engaged primarily in religious and charitable work.
• Educational Institutions: Non-profit schools, colleges, and educational foundations.
• Medical Institutions: Non-profit hospitals and medical research organizations.

Eligibility Criteria for 12A and 80G Registration

To qualify for Section 12A and 80G registration, organizations must meet certain requirements outlined by the Income Tax Department:

12A Registration Eligibility Criteria

For charitable or religious NGOs to enjoy tax exemptions on income generated from donations, they must fulfill the following conditions:

• Nature of the Organization: Applicable to trusts, societies, or Section 8 companies formed solely for charitable or religious purposes as defined in Section 2(15) of the Income Tax Act, covering activities like poverty alleviation, education, medical relief, environmental conservation, and more.
• Charitable Activities: The organization must actively engage in its defined philanthropic objectives without profit motives benefiting specific individuals or groups.
• Registration Proof: Must be duly registered as a trust, society, or Section 8 company under relevant laws, with proof provided during application.
• Income Utilization: All income and assets must be exclusively utilized for charitable or religious purposes, without any benefits to members or specific individuals.
• Financial Documentation: Proper accounting and documentation must be maintained for accurate financial operations.
• Tax Compliance: Annual tax returns must be filed punctually, even with exempt status, to retain this exemption.
• Political Neutrality: The organization must not participate in or support political activities, as this can lead to the revocation of the 12A status.

80G Registration Eligibility Criteria

This allows donors to claim tax deductions on their contributions to qualifying non-profit organizations. Eligibility for Section 80G registration includes:

• Nature of Organization: Must be a non-profit operating as a registered trust, society, or Section 8 company focused on charitable or religious objectives, serving the public interest.
• 12A Registration Requirement: Organizations must already be exempt under Sections 11 and 12, as evidenced by a 12A registration.
• Restrictions on Usage of Income: The governing documents must strictly confine the use of funds to charitable purposes only.
• Inclusivity of Beneficiaries: The benefits of the organization should not be limited to any particular religious community or caste, ensuring a broader societal benefit.
• Regular Accounting: Accurate and regular financial records must be maintained to ensure transparency and accountability.

Benefits of 12A and 80G Registrations

The advantages of securing 80G and 12A registrations for charitable organizations and NGOs are substantial, impacting various operational aspects:

• Tax Exemptions for Donors: NGOs with 80G certification provide their donors with the benefit of tax deductions on their contributions, making donations more appealing and increasing support.
• Enhanced Credibility and Trust: Being registered under Sections 12A and 80G provides an official endorsement from the Income Tax Department, boosting an NGO's credibility and trustworthiness. This is crucial for donors and partners seeking transparency in operations.
• Increased Fundraising Potential: The tax benefits associated with these registrations encourage both individuals and corporations to donate more generously, expanding the potential fundraising base and allowing NGOs to broaden their activities.
• Access to Government Grants: Numerous government programs require NGOs to possess 12A and 80G registrations to qualify for funding, creating opportunities for essential project financing.
• Long-Term Sustainability: The ability to provide tax benefits to donors not only enhances immediate contributions but also helps in building long-term partnerships, ensuring reliable funding sources that facilitate impactful, long-term projects.
• Efficient Resource Utilization: With 12A registration, NGOs must maintain meticulous records and utilize their funds strictly for charitable purposes, ensuring that resources are employed effectively and for the intended goals.

Validity of 12A and 80G Registration

The validity of Sections 12A and 80G registration initially begins with a provisional registration lasting three years. To extend this provisional status, organizations must apply for renewal either six months before the expiration date or within six months of starting operations, whichever comes first. Once renewed, registrations remain valid for a subsequent five-year period, repeating every five years to maintain benefits.

Documents Required for 12A and 80G Registration

To successfully navigate the online registration process for 12A and 80G, NGOs must furnish a comprehensive set of documents, including:

• Copy of Registration Certificate: A certified copy of the trust deed, society registration certificate, or certificate of incorporation for Section 8 companies.
• Memorandum of Association and Articles of Association: The organization’s governing documents outlining objectives and operational guidelines.
• Details of Trustees/Directors: Information about the organization’s governing body members, including names, addresses, and identification.
• Income and Expenditure Statement: For existing organizations, a financial statement detailing income and expenditures.
• Bank Account Details: A copy of the bank account statement of the NGO.
• Photographs: Passport-sized photographs of the key office bearers.
• PAN Card: Permanent Account Number (PAN) card of the NGO.
• Proof of Activities: Documentation showcasing the organization’s charitable activities.

Conclusion

In conclusion, the 12A and 80G registrations play a pivotal role in enhancing the financial sustainability and operational credibility of non-profit organizations in India. At startupa2z.com, we are dedicated to assisting NGOs through every step of the registration process. Our expertise ensures a seamless experience as you access these essential benefits and empower your organization to fulfill its mission effectively.