Important Updates on 80G and 12A Application for NGO’s

Last Updated at: Jun 21, 2021
7609
80G and 12A
The Ministry of Home Affairs (MHA) has recently issued an advisory to the NGOs to help them switch to the new FCRA regime. It said that the NGOs yet to apply for FCRA registration/ renewal will be prompted automatically to obtain the DARPAN ID, during the online registration/ renewal itself.

 

The government used to have a relaxed and lenient approach when it came to NGOs in the past. However, recent years have witnessed the government changing its stand and opting for a more stringent system with several regulatory controls. Post incorporation, most NGOs complete their 80G and 12A registration to claim exemptions. However, the Finance Act, 2020 has brought significant changes into this by introducing a new Section 12AB, in place of Section 12AA. Here, we will take a look at the essential updates regarding 80G and 12A registration, and why they are so crucial for NGO registration. 

  1. Updates via the Finance Act, 2020

  2. New requirements under the Finance Act, 2020

  3. Provisional Registration Application and Process

  4. Further Amendments and Updates

Updates via the Finance Act, 2020

The Finance Act 2020 has introduced a new section 12AB to replace section 12AA. Furthermore, it has also made amendments to Section 10(23C) and Section 80G, with all changes coming into force on June 1st, 2020. Some of the changes will include the complete online processing of NGO registration. All NGOs will now receive a unique registration number to help build a database of all the NGOs working in India. Since the NGO sector has primarily remained unregulated and unreported, this move will help in bringing some much-needed order to the system. Let us now take a quick look at what the new Act means for NGOs in India.

New requirements under the Finance Act, 2020

  1. Trusts and other institutions which have an 80G registration or 12A certificate will now have to reapply under Section 12AB or make amended provisions as per Sections 10(23C) or 80G.
  2. If the NGO has existed before June 1st, 2020 and has a valid 10(23C), 80G, and 12A registration, the NGO has to reapply as per the Finance Act 2020.
  3. NGOs had to make such applications within three months from June 1st, which is before August 31st, 2020.
  4. Such applications will go to the Principal Commissioner or Commissioner, and after verification will approve the request for the same. The entire process will take no longer than three months from the date of arrival of the application.
  5. From now on, the validity of the 80G certificate will be five years. While in the past, they enjoyed perpetuity of registration, they will now have to renew their 80G certificate every five years. 
  6. All NGOs who receive registration under Sections 12AB, 10(23C) or 80G shall have to renew their application for the same once every five years.
  7. The application for renewal of 80G Certificate validity must be filed at least six months before the expiry of the old certificate.

get legal advice 

For instance, if Trust ABC received an 80G registration, it would remain valid between financial years 2022-2023 and 2026-2027. A fresh renewal application must be filed before March 31st, 2026. Hence, the Trust must apply for 80G certificate renewal by September 30th 2025. The Commissioner will go through the application, verify it, and then grant renewal or extension for another five years. In case the Commissioner is not satisfied with the documents, he or she may call for a hearing. After hearing the plea from the NGO, he or she may pass an order rejecting the application, which would lead to cancellation of registration.

Provisional Registration Application and Process

As per the new Act, NGOs can now file for provisional registration before they begin their charitable activities or engagements. NGOs must file such applications at least one month before the start of the year before the assessment year from which the NGO wants to register itself. The registration under Sections 12AB, 10(23C), and 80G shall be valid for three years, and the entire process will take no longer than one month. Such NGOs will then have to convert their provisional registration into a normal one. This conversion should occur at least six months before the expiry of the provisional license or six months before starting the business activities, whichever comes first.

For instance, if a new trust wants a provisional registration for the year 2022-2023, it must file for one by February 28th, 2021, which is one month before the end of the previous year. Such registration will be valid for three years.

Further Amendments and Updates

  1. All existing NGOs which have registered under the following Sections will have to switch to Section 12AB via a new application.
  • Section 12A
  • Further, Section 12AA
  • Section 10(23C)
  • Section 80G

2. In the past several education and medical institutions had registration under both Sections 10(23C) and 12AA. However, that will no longer be allowed, and such institutions must renew their registration under either Section 10(23C) or Section 12AA.

3. The CBDT also extended the compliance dates for NGOs under the new Section 12AB due to the COVID-19 pandemic.

4. Furthermore, such Trusts and institutions now have to file records and statements regarding donations received. They will also have to issue certificates for donors as per TDS guidelines to avoid hefty penalties and fines.

5. For the re-registration of defunct or inactive institutions, the application for registration must be filed. It must be six months before the commencement of the financial year for which the registration is required. If the Trust has modified its objectives, then an application must be made. It should be 30 days from filing or making such a modification.

6. While the due date for filing IT audit cases is October 31st, NGOs must furnish their Tax Audit Report by September 30th.  

7. The Principal omission can cancel any registrations as per Section 12AB if they are sure that;

  • Trust’s activities are not genuine.
  • Do not follow the objectives of the Trust. 
  • Has not meant the required compliances