12A / 80G Registration
Charitable institutions are eligible for certain tax exemptions and benefits in India. These exemptions and benefits are dealt with under Sections 12A/12AA and 80G of the Income Tax Act, of 1961. To continue obtaining the benefits, the institutions availing themselves of these exemptions and benefits had to revalidate their registrations under these two sections before August 2020. This revalidation process focuses on whether the charitable activities of the institution, trust, or NGO are genuine or not.
What is 80G Certificate?
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 objective behind the 80G certificate is to encourage more and more donors to donate funds to such organizations. The benefit that the donor avails by donating to such an NGO is that he gets tax exemption on 50% of his donation as the donor is allowed to deduct their donations from their Gross Total Income. To avail the tax exemption, the donor needs to attach the stamped receipt against the donation that is issued by the NGO – the receipt needs to include the name, date, and PAN of the organization.
Documents Required for 80G Registration
The Documents required for 80G registration are as follows:
- Form 10G.
- Registration certificate and MoA in case of Section 8 companies and Societies; Trust Deed in case of a Trust.
- No objection certificate from the owner of the property where the registered office of the Institution is located.
- PAN card copy of the NGO.
- Copy of Utility Bills – Electricity bills, water bills or House Tax Receipt.
- Donor list along with their complete address and PAN.
- Book of Accounts & Income Tax Return Documents, of last three years.
- List of welfare activities being carried out & the progress report for last three years.
- Detailed list of the board of trustees.
- Deed for Verification – Original RC, MoA or Trust Deed.
What is 12A Registration?
Now that we have covered 80G Registration we will discuss 12A registration and 12A registration process.
By virtue of 12A registration, Trusts and NGOs and other Section 8 companies enjoy exemption from paying income tax. NGOs are basically organizations that are meant for charitable and non-profit activities. However, they do have income and would be required to pay tax as per normal rates if not registered under section 12A of the Income Tax Act. The Section 12A of the IT Act, 1962 does not differentiate between charitable and religious Trusts. Hence 12A registration is applicable to both the kinds of organizations.
Documents Required for 12A Registration
The Documents required for 12A registration are as follows:
- Form 10A.
- Documental evidence of the creation of the Trust or NGO – Trust Deed of a Trust; Registration Certificate and Memorandum of Association of a society; section 8 companies to submit a certificate of incorporation and copies of MoA and AoA of the company.
- Three-year bank account statement of the Trust.
- PAN card of the organization.
