Charitable institutions in India are entitled to specific tax exemptions and benefits under the Income Tax Act, 1961, particularly Sections 12A/12AA and 80G. To maintain eligibility for these exemptions, institutions needed to revalidate their registrations under these sections before August 2020. This revalidation process assesses whether the institution’s charitable activities, including those of trusts or NGOs, are genuine.

Comprehensive Guide to 80G Registration

Non-governmental organizations (NGOs) can secure income tax exemptions by registering and adhering to specific requirements. However, such registration primarily benefits the NGO and does not directly incentivize donors. To attract more contributions, NGOs can take advantage of provisions under the Income Tax Act, such as Section 80G. This section offers tax benefits to donors, encouraging them to contribute to registered organizations.

When an NGO obtains 80G registration, it provides donors with a significant advantage—allowing individuals or entities to claim a 50% tax deduction on their taxable income for donations made to the registered organization. This guide details the 80G registration process and its associated benefits, making it easier for NGOs and donors to understand its importance. 

What is Section 80G?

Section 80G of the Income Tax Act, 1961, allows donors to claim tax deductions on contributions made to eligible charitable organizations. NGOs with 80G certification are recognized by the Income Tax Department as legitimate entities for receiving tax-exempt donations. Donors can deduct a percentage of their donated amount from their taxable income, subject to the applicable limits.

Understanding 80G Registration

The 80G registration under the Income Tax Act serves as a tool for charitable organizations to attract donations by offering tax benefits to contributors. NGOs holding 80G certification are more likely to receive donations, as the associated tax deductions make contributions financially advantageous for donors.

Benefits of 80G Registration

• Tax Deductions: Donors can claim deductions of 50% or 100% of the donated amount, depending on the category of the charitable organization.

• Enhanced Credibility: Registration under Section 80G boosts the organization’s transparency and appeal, fostering trust among potential donors.

• Wider Reach: NGOs with 80G certification can access a broader donor base and raise funds more effectively. Corporations and individuals are more inclined to support organizations with this certification, knowing their contributions will serve legitimate charitable purposes. We provide the best 12A and 80G Registration Services.

Eligibility Criteria for 80G Registration

Charitable organizations must meet specific requirements to qualify for 80G registration:

1. Legal Structure: Must be registered as a trust, society, or non-profit company under Indian law.

2. Non-Profit Objective: Should primarily focus on charitable activities rather than profit-making.

3. Proper Documentation: Must maintain accurate financial records and conduct annual audits.

4. Prior Section 12A Registration: Registration under Section 12A, which provides tax exemptions to charities, is mandatory before applying for 80G.

5. Business Income Restrictions: If there is income from business activities, it must be accounted for separately and used only for charitable purposes.

6. Non-Discriminatory Focus: Cannot exclusively benefit specific religious communities or castes.

7. Darpan Portal Registration: For organizations seeking grants from the government, a Darpan Portal registration number is required.

Documents Required for 80G Registration

Applicants must submit the following documents with Form 10A or 10AB:

• Self-certified copies of incorporation and registration certificates.

• FCRA registration certificate, if applicable.

• Copies of annual accounts for up to three preceding years.

• Audit reports (if applicable) for the past three years.

• Details of activities carried out since inception or for the last three years.

• Donation receipts and other relevant records.

80G Certificate

The 80G Certificate is an official acknowledgment from the Income Tax Department, recognizing an organization as eligible to receive tax-exempt donations. Donors contributing to such organizations can avail a 50% tax deduction on their contributions. To claim the benefit, donors must provide a stamped receipt detailing their name, donation amount, date, and the recipient organization’s PAN.

Changes in 80G Registration Norms

The Finance Act 2020 revised the registration framework for Section 80G. Previously, registration was a one-time process. Now, it requires periodic renewals.

• Provisional Registration: New applicants are granted provisional registration for three years.

• Renewal: Organizations must apply for renewal six months before the registration expires or within six months of starting their activities, whichever comes first.

80G Registration Process

1. Application Submission: Submit the application to the Commissioner of Income Tax (Exemption) in your jurisdiction.

2. Inspection: The Income Tax Department inspects the organization’s premises and reviews submitted documents.

3. Supplementary Documents: If required, additional documents must be provided during the inspection.

4. Certification: Upon successful verification, the Commissioner issues the 80G Certificate.

Validity and Renewal of 80G Registration

• Provisional registration is valid for three years.

• Post-renewal, the registration is valid for five years and must be renewed at the end of each five-year term.

By understanding and utilizing the provisions under Section 80G, NGOs can attract more contributions while offering donors significant tax benefits, fostering a culture of charitable giving.

Finance Act 2020 Amendment

The Finance Act, 2020, introduced a mandate requiring charitable institutions registered under Sections 12A/12AA and/or 80G to undergo revalidation.

On March 26, 2021, the CBDT issued the Income-Tax (6th Amendment) Rules, 2021. These rules outlined the procedure for fresh registration and specified the documents required for organizations holding registrations under Sections 12A/12AA or 80G.

Due to the Covid-19 pandemic, the implementation of this amendment was postponed, with the start date deferred to October 1, 2020. Charitable institutions were required to submit their revalidation applications by December 31, 2020.

Under the updated rules, institutions or trusts already registered under Sections 12A/12AA or 80G were instructed to apply for fresh registration within three months starting April 1, 2021. This meant the deadline for revalidation applications was June 30, 2021, in accordance with the Income-Tax (6th Amendment) Rules, 2021.

Section 12A of the Income Tax Act, 1961

Registration under Section 12A/12AA of the Income Tax Act certifies that a trust or charitable institution is officially recognized by the Income Tax authorities as being established for charitable purposes.

This certification allows the institution or trust to claim income tax exemptions, provided they fulfill other compliance requirements stipulated by the law.

• Section 12A: Pertains to institutions and trusts registered before 1996.

• Section 12AA: Applies to those registered after 1996.

Non-profit organizations, including societies, trusts, or not-for-profit companies, must secure a 12A certification to avail of tax benefits.

Section 80G of the Income Tax Act, 1961

Registration under Section 80G does not directly benefit trusts or charitable institutions. Instead, it incentivizes donors by allowing them to claim tax deductions on contributions made to these registered organizations.

Only NGOs that have secured both Section 12A and 80G registrations are eligible for government funding. Registration under Section 80G is crucial for encouraging donations and enabling donors to enjoy tax benefits.

Revalidation Process for Section 12A and 80G

To claim income tax exemptions, trusts, charitable institutions, and NGOs must apply online to the Principal Commissioner or Commissioner of Income Tax using Form 10A. Below is the step-by-step process for registration/revalidation:

1. Login: Access the e-filing portal of the Income Tax Department.

2. Navigate: Select ‘Income Tax Forms’ under the e-File tab.

3. Form Selection: Choose ‘Form 10A’ and select the relevant assessment year.

4. Submission Mode: Opt for ‘Prepare and Submit Online.’

5. Form Completion: Fill in all required details and attach the necessary documents.

6. Submission: Submit the form using an Electronic Verification Code (EVC) or digital signatures.

NGOs applying under the amended provisions of Section 80G must provide their registration details with the DARPAN portal of Niti Aayog. This registration is mandatory to receive grants or assistance from the Central or State Government.

Documents Required for Revalidation

The following documents must be submitted with the application for revalidation:

1. Incorporation Document: Self-certified copy of the incorporation certificate for societies or trusts.

2. Registration Proof: Self-certified copy of registration with the relevant authority (Registrar of Companies, Societies, Firms, or Public Trusts).

3. FCRA Registration: If applicable, self-certified copy of registration under the Foreign Contribution (Regulation) Act, 2010.

4. Existing Registration Order: Self-certified copy of the current registration under Section 12A/12AA/12AB.

5. Annual Accounts: Copies of annual accounts for up to three years prior to the application date (for existing entities).

6. Business Income: If applicable, copies of annual accounts and audit reports under Section 44AB for three years before the application year.

7. Objects Modification: Self-certified copy of documents evidencing any modifications or adoption of objectives.

8. Activity Notes: Detailed notes on the activities of the trust or institution.

9. DARPAN Details: Registration details on the DARPAN portal (if registered).

Obtaining registration under Sections 12A and 80G ensures access to tax benefits and government funding while fostering transparency and trust in charitable activities.