12A Registration and 80G Certification – Understanding 12A Registration
Overview:
12A Registration and 80G Certification are crucial for non-profit organizations in India. Specifically, 12A registration offers income tax exemption to NGOs, Section 8 companies, and charitable or religious trusts. By obtaining this certification, these organizations preserve their non-profit nature and ensure their income remains untaxed. This helps in maximizing the use of funds for charitable and social welfare initiatives.
Step-by-Step Process of 12A Registration
- Application Submission: Submit Form 10A as per Rule 17A under the Income Tax Act, 1962.
- Filing Authority: Send the application to the Jurisdictional Commissioner of Income Tax (Exemptions).
- Review & Verification: The Commissioner may request supporting documents for scrutiny.
- Issuance of Certificate: Upon satisfaction, the Commissioner will grant the 12A registration certificate. Otherwise, the applicant will be given a chance to present their case.
Validity of 12A Registration
Once approved, 12A registration remains valid for a lifetime unless revoked for non-compliance or fraud. This lifetime validity makes it a one-time process for NGOs looking for long-term tax exemption benefits.
Documents Required for 12A Registration
- Completed Form 10A
- Trust Deed, Registration Certificate, or Memorandum of Association
- Bank statements for the last three financial years
- PAN card of the organization
Benefits of 12A Registration for NGOs and Trusts
- Tax Benefits: Enables organizations to save taxes and utilize more funds for their mission.
- Access to Government Schemes: Makes NGOs eligible for applying to various government-funded programs.
- Improved Credibility: Legal registration builds trust among donors and stakeholders.
- Essential for 80G Certification: A mandatory prerequisite to apply for 80G certification for donor benefits.
12A Registration and 80G Certification – Importance of 80G Certification
Overview:
The 80G certification under the Income Tax Act allows donors to claim tax deductions, usually 50% of their donation amount. This encourages individuals and companies to donate generously to certified non-profit organizations. For NGOs, having 80G certification enhances reputation, credibility, and helps attract more funding.
Step-by-Step Process of 80G Certification
- Form Submission: Fill and submit Form 10G to the Income Tax Commissioner (Exemptions).
- Site Inspection: Income Tax authorities may inspect the premises and evaluate welfare activities.
- Document Verification: Submit all required reports, donor details, and compliance records.
- Certification: If all conditions are met, the 80G certificate will be granted to the organization.
Validity of 80G Certification
Similar to 12A registration, 80G certification is also valid for a lifetime unless canceled due to non-compliance or misuse. This ensures long-term benefits for both NGOs and their donors.
Documents Required for 80G Certification
- Duly filled Form 10G
- Trust Deed or Memorandum of Association and Registration Certificate
- No Objection Certificate from the property owner
- Utility bills such as electricity, water, or property tax receipt
- Copy of NGO’s PAN card
- Donor list with PAN and address
- Books of accounts and ITRs for the last three years
- Annual progress or activity reports for the last three years
- Board of Trustees list with contact details
- Original registration documents or trust deed for verification
Benefits of 80G Certification for NGOs
- More Donations: Tax savings encourage donors to contribute more to certified organizations.
- CSR Opportunities: Makes your NGO eligible for CSR contributions from corporate houses.
- Government Grant Eligibility: Adds weight when applying for government support and funding schemes.
- Enhanced Credibility: 80G certification boosts trust, making your NGO appear reliable and legally compliant.