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What Is 12A Registration in Income Tax?

Non-profit organisations are obliged to be entitled to tax exemptions. The Trusts and institutions can register for exemption under 12a.

The 12A registration is an essential document for those who must pay income tax. This document helps the government keep track of income tax payments and ensures that the correct amount of tax is being produced. It also allows the government to collect information about taxpayers’ income and expenditures. The 12A registration is valid for one year and must be restarted yearly. The process for obtaining a 12A registration varies depending on whether an individual or corporate body is looking to register their organisation as exempt from paying taxes. If you’re considering registering your not-for-profit entity with the Income Tax Department, ensure it meets all requirements before applying! To apply, you will need your INCB No., tax filing year, address, and any other information requested by the Income Tax Department in their application form. To ensure that all requirements have been met correctly before applying or, even worse: failing Inspectors found lacking during an inspection may result in penalties such as fines up to 2 lakhs per instance!

7 Benefits of 12A Registration 

  • 12A registration gives Recognition to your NGO: – Once your NGO is registered under section 12A of the Income Tax Act, 1961, it becomes a recognised entity. This recognition helps the NGO to get more funds from various trusts and foundations. 
  • Exemption from income tax: – One of the main benefits of 12A registration is that the NGO gets an exemption from income tax. All the income of the NGO applied for its activities will be exempted from income tax. 
  • Exemption from TDS: – TDS means Tax Deducted at Source. As per Income Tax rules, every organisation or individual making certain payments must deduct TDS. But if an NGO is registered under 12A, it will be exempted from TDS
  •  CSR benefits: – Many corporates have started doing Corporate Social Responsibility, and they are ready to give funds to those NGOs working for social causes and registered under 12A. So, if your NGO is registered, it can get CSR benefits. 
  • Easier to open a bank account: – Once your NGO registration is done under 12A, it becomes easier for you to open a bank account in the name of your NGO, as banks require a registration number while opening an account. 
  • Availing of foreign funds: – If an NGO wants to avail foreign funds, then the NGO must get registration under 12A. 
  •  Benefit of 80G: – Under section 80G of the Income Tax Act, 1961, donations made to some specified funds and charitable institutions are allowed to be deducted from total gross income before arriving at the taxable income.

Criteria to be Eligible for 12A

  • To be eligible for Section 12A registration, the organisation must meet the definition of the Income Tax Act- charitable purpose as in the Relief to the poor, education, medical Relief, and activities undertaken to preserve the environment are examples of charitable purposes. Seeking any other public utility goal will also qualify as a charitable purpose.
  • The primary eligibility criteria will be to determine whether the assessee’s activities are motivated by a profit motive. Registration will be granted if there is no profit motive.
  • If the assesses engages in activities related to commerce or trade, the facility provided under this section is limited. In such cases, registration is only granted if the receipts from the trade activity are below 20% of the assessee’s total receipts.
  • It should also be taken care of that 12A Registration does not imply Private or Family Trusts. The assessee’s activities should be genuinely for the welfare of the public. 

How is Form 10A related to 12A

Form 10 A is an income tax return form filed by an assesses claiming exemption from tax on his/her total income. The form can be downloaded from the website of the Income Tax Department. The due date for filing the form is 30th June of the assessment year. The form must be accompanied by a duly signed declaration in original and a copy of the PAN Card.

Form 10A is an annual return that has to be filed for tax audit u/s 44AB of the Income Tax Act, 1961. It is a simple form requiring significantly less information than Form 10B. The primary purpose of Form 10A is to bring uniformity in the filing of returns by different assesses and to maintain accounts in such a manner that it becomes easier for the department to verify the correctness of the return filed. 

As per the provision in section 12A, any assesses resident in India and has income from property held for charitable or religious purposes shall be entitled to exemption from income tax in respect of such payment. However, no deduction shall be allowed under any other Act provision for any expenditure incurred by an assesses for claiming exemption under this section. 

Thus, if an assesses having exempt income from property held for charitable purposes claims deduction u/ss 80C to 80U on some other head of income, he would not be entitled to exemption u/s 12A on his exempt income because as per proviso to section 12A now such exemption is not available if deductions are claimed u/s 80C to 80U on some other head of income. 

Therefore, an assesses has first to determine whether his income falls under section 10(15)(iv)(h), i.e. property held for charitable purposes, before claiming exemption u/s 12A. Once he ascertains his income is derived from generous property, he can claim exemption u/s 12A. 

Hence we see that both these sections 10(15)(iv)(h) and 12A are closely interlinked with each other, and both need to be read together while claiming exemption on Charitable Institutions. Therefore we can say that Form 10 A is closely related to 12 As both these forms deal with the same aspects, i.e. return filed by Charitable Institutions and seeking deduction u/s 10(15)(iv)(h)or seeking exemption u/s 12A respectively.

Documents Required for 12A Registration

  • The copy of the self-certified instrument used to find the trust or institution.
  • An evident copy of the instrument that declares the institution or trust is created should be submitted to the income tax department if the trust is created, not utilising drafting and registration of the instrument. 
  • The applicable body may be the Registrar of Firms and Societies or Registrar of Public Trusts and the Registrar of Companies if it is needed to submit the self-certified instrument copy with the applicable body. 
  • A copy of the self-certified instrument that is evident of modifications and changes in the trust’s objectives.
  • Annual financial statements for 3 consecutive years. 
  • If the registration is cancelled by default error, you can apply for it again.
  • A copy of the self-certified abandoned instrument is needed when rejected and applied back. 

The Procedure of Obtaining 12A Registration

To be eligible for registration under Section 48 A, the assesses must first apply to compliance with all necessary formats and procedures. After submitting their applications online or through other means allowed by law, applicants may receive requests from tax authorities asking them for Additional Information/Documents as needed regarding the authenticity of activities undertaken within trusts. 

If approved upon review by Tax Department, then this will result in forward able orders sent directly to respective parties allowing said individual privileges, which can eventually lead to becoming permanent residents once again after fulfilling specific criteria.


If you are looking for someone to do the work of 12a and return income tax, Vakilsearch is here to do the hard work for you. Need assistance with online return filing? Give us a call.

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