Any business entity, which is not working for profit, such as charitable trust, religious organization, section 8 company or society, is eligible to claim complete exemption from income tax. The condition that it should be registered under section 12A. It is crucial that any such NGO, trust, or organisation register under section 12A as soon as they are formed. An NGO will be required to pay income tax on any excess throughout the year if it does not receive a 12A certificate. Obtaining 12A certification is necessary to qualify for tax benefits regardless of whether the NGO is registered as a trust, society, or section 8 corporation.
Without it, your receipts will be entitled to normal tax rates and the beneficial exemptions available to you will be void. It acts as a valid proof for the existence and objectives of your NGO. Registration will also help you to get grants from the government or organizations from abroad.
What are the Benefits of Registration under Section 12A
Income will be exempted from taxation.
An organisation registered under section 12A becomes eligible to receive government, Abroad and various private sector grants.
Helps in taking FCRA Registration.
12A Registration Process
The application needs to be done using Form 10A, as per Rule 17A/11AA/2C of the Income Tax Act, 1962. The application needs to be filed with the Jurisdictional Commissioner of Income Tax (Exemptions).
Trusts and newly established organizations applying for income tax for the first time get a provisional certificate for three years.
After receipt of the form and documents, the commissioner examines the acts of the organization for validity, 3 years after receipt of the Provisional Certificate. He has the right to request any other paperwork or information that he sees fit.
On the satisfactory report, he will pass an order in writing for grant of 12A Registration. The applicant is given a fair opportunity to be heard if the Commissioner rejects the application because he is not satisfied.
12A Registration can be revoked at any time with the provision that there is proof that the organization's activities are contrary to its objectives, insincere, or benefit a particular caste or religion, that its funds are being invested in prohibited ways, or that its income is going to a particular person
Documents Required for 12A Registration
Required documents for filing 12A registrations with complete certification:
1. Ngo/Trust PAN Id
2. Registration certificate
4. Audit Report
5. Spokes person as well as three members pan id, email-id & phone number linked aadhar.
What is 80G Certificate?
Under Section 80G of the Income Tax Act, you get tax exemption on donations made to charity. This tax exemption can be taken on donations made by the government to relief funds and organizations working for public welfare. Any individual, company, firm or any other level of taxpayer can take advantage of this tax deduction.
Cash donation of more than 2000 is not valid: If you have donated in cash, then only Rs 2000 out of the entire donation can be used for tax deduction. The rest of the donation will be included in the tax calculation.
Donations made in cash above Rs 2000 are not eligible for Section 80G tax exemptions. even if you still have the receipt. This law has been put into effect by the government as of the 2017–18 fiscal year. Donate, or donate more than 2000 Rupees, only via check, demand draught, or online payment. Don't pay with cash
What are the Benefits of Registration under Section 80G?
A donor can avail of a deduction from their taxable income.
Attracts the donor to donate.
Getting an 80G Registration also facilitates seeking foreign contributions.
Only an NGO with 12A and 80G registration is eligible for government funding.
As a society by law, 80G registration gives your NGO a promising prospect, enhancing its goodwill and the confidence of those associated with your brand.
80G Registration Process
80G Registration procedure consists of following steps:
The application for 80G certificate needs to be submitted to the Commissioner of Income Tax (Exemption) in the jurisdictional area of the institution.
Once the form and the required documents for 80G registration are submitted, an on-the-premise inspection is done by the Income Tax department.
The officials might ask for additional documents and evidence that are required to be made available by the institution.
On satisfactory verification and scrutinizing of documents and the office of the NGO, the 80G certificate is awarded to the institution by the Commissioner.
Documents Required for 80G Registration
Ngo/Trust pan id
3 Years audit report (not mandatory for new registered ngo)
Spokes person as well as three members pan id, email-id & phone number linked with aadhar