Brief about 12 a and 80 g registration

It is imperative to know that 12 A and 80 G registration is only applicable to NGOs and charitable organization, if only they fulfill conditions described below:-

1. First and the foremost is that they should not have any income generated business.
2. Second is that it should be either a registered society or a charitable trust or Section 8 company registered with Ministry of Corporate Affairs.
3. Third in the list is that it should not be using the assets or money for any other purposes.
4. Fourth and the important one is that they should maintain a book of accounts.
5. The trustees or any other body governing the organization should not be involved in deriving any undue benefits from these funds.
6. They should not be working for the benefit of any particular caste or religion.
7. Also, in the case of business-related income, the organization should maintain a separate book of accounts. However, the donations received by the NGO must not be used for such businesses.

Let us first study about 80 G registration:-

80 G registration comes under the ambit of section 80 g of Income Tax act and thereof provides benefits to the donor whereas on the other hand section 12 a registration will assist an NGO to help an organization to get their income exempted from tax.

80 G registration comes under the ambit of section 80 g of Income Tax act and thereof provides benefits to the donor whereas on the other hand section 12 a registration will assist an NGO to help an organization to get their income exempted from tax.

• MoA and Registration certificate in case of Section 8 companies and Societies and a Trust Deed in case of a Trust.
• No objection certificate from the owner of the property where the registered office of the Institution is situated.
• Form 10G.
• A copy of the PAN of the NGO.
• Copy of Utility Bills such as Electricity bill, water bill or House Tax Receipt.
• A list of the donors along with their address and PAN.
• The documents related to Income Tax Returns and the Book of Accounts of the past three years.
• The list of the welfare activities being carried out & the progress report of the last three years, if any.
• A detailed list of the Board of Trustees.
• Original RC, MoA, or Trust Deed.

Now that we are done with the documents required for 80 G registration, let us discuss at 80 G registration process:-

• The application for 80G certificate needs to be submitted to the Commissioner of Income Tax (Exemption) in the jurisdictional area of the institution. 80G Certificate is issued to a non-profit organization or non-governmental organizations (NGO), a charitable trust or a Section 8 Company by the Income Tax Department. The main objective behind the 80G certificate is to encourage more to donate funds to such organizations.
• 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.

80 G Deduction

Donations which qualify for 80 G deduction are classified below:-

1. Donations with 100% deduction (Without any qualifying limit): Donations made under this category enjoy 100% tax deduction and are not subject to any qualification limit being met. Donations to the National Defence Fund, Prime Minister’s National Relief Fund, The National Foundation for Communal Harmony, National/State Blood Transfusion Council, etc. qualify for such deductions.
2. Donations with 50% Deduction (Without any qualifying limit): Donations made towards trusts like Prime Minister’s Drought Relief Fund, National Children’s Fund, Indira Gandhi Memorial Fund, etc. qualify for 50% tax deduction on donated amount.
3. Donations with 100% deduction (Subjected to 10% of adjusted gross total income): Donations made to local authorities or government to promote family planning and donations to Indian Olympic Association qualify for deductions under this category. In such cases, only 10% of the donor’s Adjusted Gross Total Income is eligible for deductions. Donations which exceed this amount are rounded off to 10%.
4. Donations with 50% deduction (Subjected to 10% of adjusted gross total income): Donations made to any local authority or the government which would then use it for any charitable purpose qualify for deductions under this category. In such cases, only 10% of the donor’s Adjusted Gross Total Income are eligible for deductions. Donations which exceed this amount are capped at 10%.

Details about 12 A registration

Section 12 A of the Income Tax Act, 1961, is basically a onetime tax exemption provided to trusts, NGOs and Section 8 Companies. Organizations holding a registration under section 12A are exempted from paying taxes on their surplus income. NGOs are organizations involved in charitable and non-profit activities. However, they do earn income and they are required to pay tax as per normal rates if not registered under section 12A, Income Tax Act.

Documents for 12 A registration process:-

The following documents are required for 12A registration:

• Documental evidence of the creation of the Trust or NGO {Trust Deed of a Trust; Registration Certificate and Memorandum of Association {MOA} of a society}
• Section 8 companies need to submit a certificate of incorporation and copies of MoA and AoA of the company
• Form 10A.
• Three-year bank account statement of the Trust.
• PAN of the organization.

Now that we are done with documents required for 12 A registration process, let us now focus on steps in 12 A registration process:-

1. The application needs to be done using Form 10A, as per Rule 17A of the Income Tax Act, 1962. The application needs to be filed with the Jurisdictional Commissioner of Income Tax (Exemptions).
2. Once the Form and the documents have been received, the Commissioner verifies the authenticity of the activities of the organization. He can call for additional documents and information as deemed fit.
3. On the satisfactory report, he will pass an order in writing for grant of 12A Registration. In case the Commissioner is not satisfied he will reject the application after which the applicant is given a fair chance to be heard.

Renewal of 80 g registration and 12a registration renewal is listed below:-

The overall process may take up to three months, where the application shall be made within 1 week from the date of submission of documents. It holds a 5-year validity and requires renewal every 5 years.

Documents Required:

• Registered trust deed/society registration certificate/incorporation certificate
• Self-certified copies of audited annual accounts for the preceding three financial years
• NGO DARPAN ID (if receiving government grants)
• FCRA ID (if receiving foreign donations)
• Self-certified copy of the certification previously obtained under 12A and 80G
• A note on the activities of the applicant.

Conclusion

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