Registration under Section 80G and Section 12A - NGO Registration

OR

Easy monthly EMI options available
No Spam. No Sharing. 100% Confidentiality.

Registration under Section 80G and Section 12A - NGO Registration


Income Tax is often the hardest aspect for every professional and so for NGO founders and financial experts of NGO. Here we describe what NGO registration means under Sections 12A and 80G for tax exemption.

Registration under 12A:


As registration under Section 12A is for tax exemption, an NGO which has not registered under this cannot enjoy the privilege of tax evasion and would have to pay surplus during the year.

How to register under Section 12A


All Charitable trusts, Societies, and Section 8 Companies, except Private or family Trust, are eligible to register under Section 12A. But before registration under 12 A and 80G, an NGO has to get itself first registered under the Income tax by following the below-mentioned steps.

Step 1: Application has to be filed in Form 10A with the Income Tax Commissioner

Step 2: Important documents like ID proof of the trustees or managers, registration certificate of the NGO, Trust deed or MoA or AoA need to be submitted

Step 3: A copy of the PAN of the registered NGO

Step 4: Once the documents are submitted, it will be reviewed by the Commissioner who may ask for additional information

Step 5: If everything is found to be satisfactory, the registration will be done, else it will be rejected.

The overall process may take up five months and valid for a lifetime.

Benefits:

  • Provision to gain grants from governments and international organizations
  • Registration certificate serves as valid proof of the purpose of the NGO and its operations
  • All NGOs, be it Trust, Company or Society is eligible to avail exclusion from taxes
  • FCRA registration benefits

Registration under 80G:


As per Section 80G of the Income tax Act, if an NGO gets an 80G certification then its donors (a person who donates money to the NGO) will not be taxed for offering donations and gain financial benefits in the taxable amount of their income.

How to register under Section 80G


The NGO which wants to register under Section 80G and 12A has to be duly registered and charities should not have a religious angle.

Step 1: An application has to be filed in Form 10G with the Income Tax Commissioner

Step 2: Important documents to be submitted are:

  • Original registration certificate and Trust Deed or MoA
  • A no-objection certificate from the landlord of the registered property where operations are performed
  • Copies of the water bill and electricity bill
  • Copy of the PAN card of the NGO
  • Details of the donors - including their ID proofs and PAN
  • Details of the members of the governing body - including their ID proofs and PAN
  • Valid evidence of welfare operations performed and its progress since the inception of NGO or at least three years
  • Balance sheet since its inception or at least three years

Step 3: Upon submission, the documents would be reviewed by the Commissioner. If required, he may ask for additional documents or information and the same have to be provided within the timeframe to avoid rejection

Benefits:

  • As a society byelaw, 80G certification enhances the prospects and credibility of the organization
  • Donors reap the benefits of less taxable incomes
  • Possibility of attracting more donors
  • Eligibility to get government funds
  • NGO owners can seek foreign contributions without many hassles

While the registration process may take a few months, it is a lifetime registration with no requirement for renewals.

Disqualification from exemption:


At times, under certain circumstances even after the registration process and meeting all the legal requirements, donors may be disentitled from claiming tax deductions.

The following situations are:

1. If an organization is engaged in religious affairs or promotes the interest of a particular community

2. If the organization does not hold transparency in its routine account of expenditures and receipts

3. If the NGO is not legally registered under the particular Act it falls onto - Societies, Section 8 and Trust

4. If this registration process for NGO has any ‘non exempted income’, that is if they have any business income or a commercial purpose that gives rise to incomes not specifically exempted for NGOs.

Know the things should be on mind before starting an NGO in India.


  • Happy customers
  • Logo of VakilSearch premium customer Indiaproperty
  • Logo of VakilSearch premium customer iBlueBottle
  • Logo of VakilSearch premium customer Sulekha
  • Logo of VakilSearch premium customer Housing.com