12A & 80G Registration for Non-Profit Organisations

Non-profit organizations need registration under Section 12A and Section 80G of the Income Tax Act to avail tax exemptions. These registrations are essential for claiming exemption on income and for making donations eligible for tax benefits.

Significance of Sections 12A and 80G

Section 80G

An 80G certificate is issued by the Income Tax Department to NGOs, charitable trusts, and Section 8 companies. It allows these organizations to receive donations from individuals and entities, while enabling donors to claim tax deductions. Donors contributing to an 80G-registered organization can claim a deduction of 50% of the donated amount from their gross total income. To avail this benefit, donors must obtain a donation receipt containing the organization’s name, PAN, and date of donation.

Only donations to institutions or funds specified under the Act qualify for this deduction. It applies to all taxpayers, including individuals, companies, and firms. Importantly, only monetary contributions via cheque, draft, or cash are eligible; in-kind donations like goods or services do not qualify.

Section 12A

12A registration provides tax exemption on the income of charitable trusts, religious institutions, and non-profit organizations. Once registered, an entity’s income used for charitable or religious purposes under Section 2(15) of the Act is exempt from taxation.

Without 12A registration, even genuine charitable activities are subject to tax, making this registration crucial for NGOs, charitable trusts, and Section 8 companies seeking exemptions and other benefits.

Procedure for 12A Registration

1. Application (Form 10A)
   The organization applies for registration through Form 10A. The Principal Commissioner or Commissioner may request supporting documents or details to verify:
   
   • The authenticity of the organization’s activities.
   • Compliance with relevant laws governing its operations.
2. Issuance of Certificate
   After satisfactory verification, the Commissioner issues a written order granting 12A registration. If the organization fails to meet criteria, a written refusal is issued, providing the applicant an opportunity for a hearing.

Once granted, 12A registration is valid for the lifetime of the organization.

Documents Required for 12A Registration (Along with Form 10A)

To apply for 12A registration, a non-profit organization must submit the following documents along with Form 10A:

• Registration Certificate: Trust deed or registration certificate of the NGO; in the case of a Section 8 company or society, include the MOA & AOA.
• PAN Copy of the organization.
• Bank Statements: Last three years of the organization’s bank account.
• Landowner NOC: No Objection Certificate for the property where the organization is located.
• Details of Governing Body: Names and roles of trustees or board members.
• List of Contributors: Names and PAN of all donors.
• Assets Information: Details of securities, shares, or property purchased by or on behalf of the organization.
• Authorized Declaration: Required declaration signed by an authorized person of the organization.
• PAN & Aadhaar of Trustees/Members: Identity documents of key personnel.
• Trust Deed / MOA & AOA: Applicable for societies or Section 8 companies.

Conditions to Obtain 80G Registration

To qualify for 80G registration, an organization must meet the following conditions:

• The organization must be registered in India and operate solely for charitable purposes.
• Any income received should generally be exempt from tax under Sections 11, 12, 10(23AA), or 10(23C).
• If the organization generates business profits, the following rules apply:
  
  • Separate accounts must be maintained for business income.
  • Donations must not be used directly or indirectly for business purposes.
  • The organization must issue a certificate confirming the separation of accounts and proper use of donations.
• The organization’s governing statute must ensure that income or property is applied only for charitable purposes.
• The organization must not support any specific religion or caste.
• Eligible entities include:
  
  • Public charitable trusts
  • Registered societies or Section 8 companies
  • Law-established universities or educational institutions recognized by the government
  • Fully or partially government-funded colleges or institutions

Procedure for Obtaining 80G Registration

As per Rule 11A of the Income Tax Rules, 1962, the process for securing 80G registration is as follows:

1. Application (Form 10G)
   
   • The organization must submit Form 10G, verified by an authorized person under Section 140, as applicable to the entity.
2. Electronic Submission
   
   • Form 10G should be submitted electronically:
     
     • With a digital signature, if the organization files returns using a digital signature, or
     • Using an electronic verification code (EVC), if filing is not under a digital signature.
3. Data Standards & Security
   
   • The Principal Director-General or Director-General of Income-tax (Systems) establishes the data structure, standards, and submission procedure for Form 10G. They also ensure proper security, archival, and retrieval policies for the submitted form.
4. Approval by Commissioner
   
   • The Principal Commissioner or Commissioner, after verifying that the organization meets all conditions under Section 80G(5), will issue written approval.
5. Denial with Opportunity to be Heard
   
   • If any condition is not met, the Commissioner will provide written reasons for denial and give the applicant an opportunity for a hearing before a final decision.

Documents Required for 80G Registration (Along with Form 10G)

To apply for 80G registration, the following documents must be submitted:

• Registration Certificate: Trust deed or registration certificate; in the case of a Section 8 company or society, include MOA & AOA.
• PAN Copy of the organization.
• Bank Statements: Last three years of the organization’s bank account.
• Landowner NOC: No Objection Certificate for the property where the organization operates.
• Governing Body Details: Names and roles of trustees or board members.
• List of Contributors: Names and PAN of all donors.
• Assets Information: Details of securities, shares, or property purchased by or on behalf of the organization.
• Authorized Declaration: Declaration signed by an authorized person of the organization.
• PAN & Aadhaar of Trustees/Members: Identity documents of key personnel.
• Trust Deed / MOA & AOA: Applicable for societies or Section 8 companies.

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