12A and 80G registration to avail Income Tax Exemption Benefits for Startups
The Procedure for 80G/ 12A registration of NGO/ Charitable Trust/ Institution under section 12A, section 12AA and Section 80G which will facilitate NGO/ Charitable Trust/ Institution to avail income tax exemption benefits.
A nongovernmental organization (NGO) that is neither a part of a government nor a conventional for profit business. Usually set up by ordinary citizens, NGOs may be funded by governments, foundations, businesses, or private persons. NGOs are highly diverse groups of organizations engaged in a wide range of activities, and take different forms in different parts of the world. Some may have charitable status, while others may be registered for tax exemption based on recognition of social purposes. Others may be fronts for political, religious or other interest groups.
Both Applications can be applied together or it can also be applied separately also. If some organization is willing to apply both applications separately, then application for registration u/s 12A will be applied First. Getting 12A registration is must for applying application for registration u/s 80G of Income Tax Act, 1961.
In India, the various privileges are available to NGO/Charitable Trust’s in context of tax exemption. As per section 11 of income tax act, 1961 the NGO’s got various tax exemption benefits with respect to its income/donation, like :
- 15% of income/donation is blindly exempt whether or not the above income applied for charitable purpose;
- Voluntary contributions/donation made with a specific direction that they shall form part of the corpus of the trust is wholly exempt;
- Donor of NGO will get deduction with respect to the donation made to such NGO;
- And there are many more.
In order to avail such benefits, the NGO/ charitable trust has to register themselves with income tax under section 12A
Procedure for Registration u/s 12A/12AA/80G
First step Apply for PAN card, this will the birth of Trust in the eyes of Income Tax Department.
Second step Compiled the given below documents for applying registration u/s 12A & 80G (both application can be apply together or separately also) :
1.Dully filled in Form – 10A for registration u/s 12A registration;
2.Dully filled in Form – 10G for registration u/s 80G registration;
3.Registration Certificate and MOA /Trust Deed (two copies – self attested by NGO head);
4.NOC from Landlord (where registered office is situated, if rented);
5.Copy of PAN card of NGO;
6.Electricity Bill / House tax Receipt /Water Bill (photocopy);
7.Short note on the activities of the trust and evidence of welfare activities carried out & Progress Report since inception or last 3 years;
8.Books of Accounts, Balance Sheet & ITR (if any), since inception or last 3years;
9.List of donors along with their address and PAN (If Any);
10.List of governing body/board of trustees members with their contact details along with copy of PAN;
11.Original RC and MOA /Trust Deed for verification(The same will be return to you after verification);
12.Affidavit / undertaking by NGO Head.
Third Step on compiling the above documents with covering letter, the responsible person shall submit the documents before Commissioner of Income Tax within which NGO jurisdiction lies.
Fourth Step NGO will receive notice for clarifications from Income Tax Department in 23 months after applying.
Fifth Step Reply of notice will be submitted by the responsible person of NGO along with all relevant desired documents to the Income Tax Departments.
Last Step Exemption Certificates will be issued.
|What is section 12-A of Income Tax Act||Income of an organization is exempted if NGO has 12-A registration. This is one time registration|
|What is section 80-G of Income Tax Act||If an organization has obtained certification under section 80-G of Income Tax Act then donors of that NGO can claim exemption from Income Tax. Earlier it was not one time registration and trust were required to get 80G Certificate renewed after validity period.
But, as per circular 7/2010 dated 27.10.2010 issued by the CBDT, all trusts enjoying exemption u/s 80G as on 01.10.2009 and other trusts obtaining 80G certificate after 01.10.2009 shall continue to hold and enjoy the same for perpetuity unless revoked by the Income Tax Authorities.
|When an organization can apply for registration under 12A & 80G of Income Tax Act ?||Application for Registration under section 12A and 80G can be applied just After registration of the NGO.|
|Where to apply for Registration under section 12A & 80G of Income Tax Act?||Application for registration under section 12A and 80G can be applied to the Commissioner of income tax (exemption) having jurisdiction over the institution.|
|Can both the application under section 12A and 80G of Income Tax Act applied together?||Yes, both applications can be applied together or it can be also applied separately. if some organization is willing to apply both applications separately, then application for registration u/s 12A will be applied First. Getting 12A registration must for applying application for registration u/s 80G of Income Tax Act.|
|What is timeline for getting registration under section 12A and 80G of Income Tax Act?||If application for registration under section 12A and 80G will be applied through NGO Factory. It should take 3-4 months|
|what applications Form are being used for applying for registration under section 12A and 80G of Income Tax Act?||For 12A Registration : Form 10A
For 80G Registration : Form 10G
(for New Application and renewal both)
|What is the validity period of the registration under section 12A and 80G of Income Tax Act||12A Registration : Lifetime Validity
80G Registration : 1 to 3 years validity
|What are the conditions on section 80G||There are few conditions on section 80G:-
The NGO should not have any income which is not exempted, such as business income if the NGO has business income then it should maintain separate books of account and should not divert donations received for the purpose of such business.
The bylaws or objectives of the NGOs should not contain any provision for spending the income or assets of NGO for the purpose other than charitable.
The NGO should not work for the benefit of particular religious community or caste.
The NGO should maintain regular accounts of receipt & expenditure.
The NGO should properly register under the Socities Regulation Act 1860 or under any law corresponding to that Act or should register under section 25 of the Companies Act 1956 or Section 8 of the Companies Act, 2013.
|What is the Tax Exemption Limit on Donation?||There is limit on how much money can be exempted from the Income Tax:-
If the amount of deduction to a charitable organization or trust is more than 10% of the gross total income computed under the Act (as reduced by income on which income tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), then the amount in excess of 10% of Gross Total Income shall not qualify for deduction under Section 80G.
The persons or organizations who donate under section 80G gets a deduction of 50% from their taxable income.