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Important Updates on 80G & 12A Applications for NGOs

The Indian government recently revised the regulation and compliance criteria for NGOs operating in the country. Stay updated on the important changes to Section 80G and 12A and the new updates made via the Finance Act, 2020.

In the past, the government had a more flexible and lenient approach toward NGOs. However, in recent years, the government has shifted its position, opting for a more stringent system with a number of regulatory controls. Most NGOs complete their 80G and 12A registrations after establishment in order to claim exemptions.

However, the Finance Act, of 2020 has brought significant changes into this process 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.  

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 final filing date for registration or approval under Section 10(23C), 12A, or 80G of the Act, is extended to September 30, 2022.

Updates With 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 1 June 2020. Some of the changes 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 that 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 1 June 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 1 June, which was before 31 August 2020, which was then extended to 30 June 2021 due to the Covid-19 pandemic
  4. Such applications will go to the principal commissioner or commissioner and, after verification, they 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 deduction shall have to renew their application for the same once every five years
  7. The application for renewal of 80G certificate validity must file at least six months before the expiry of the old certificate.

For instance, if trust ABC received an 80G registration in 2022-2023, it would remain valid between the financial years 2022-2023 and 2026-2027. A fresh renewal application must be filed before 31 March 2026. Hence, the trust must apply for an 80G certificate renewal by 30 September 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. This would lead to the 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 commencement of the year before the assessment year. 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 non-profit work 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 28 February 2021. This is one month before the end of the previous year. Such registrations will be valid for three years.

“Secure your nonprofit’s future with an 80G and 12A certificate. Empower your donors with tax exemptions, encouraging more support for your noble cause”

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
  • Section 12AA
  • Section 10(23C)
  • Section 80G
  1. In the past, a number of educational and medical institutions held registrations under Sections 10(23C) and 12AA. However, that will no longer be allowed, and such institutions must renew their registration.
  2. The CBDT also extended the compliance dates for NGOs under the new Section 12AB due to the COVID-19 pandemic
  3. 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
  4. 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. If the trust has modified its objectives, then an application must be made. It should be made within 30 days of filing or making such a modification
  5. While the due date is October 31, NGOs must furnish their tax audit report by September 30
  6. The principal commission can cancel any registrations as per Section 12AB if they are sure that;
  • The trust’s activities are not genuine
  • They do not follow the objectives of the trust
  • It has not met the required compliances.

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If you’re a social entrepreneur struggling to meet the demands of these new amendments and updates, worry not, hand over the hassle of documentation and the stress of a lengthy application process to the experts at Vakilsearch. 

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