12A and 80G Registration

12A and 80G Registration

In India, non-profit organisations can benefit significantly from two important registrations provided by the Income Tax Department—12A and 80G Registration. While 12A Registration grants income tax exemption to eligible charitable organisations, 80G Registration enables donors to claim tax deductions on their donations.

These registrations help NGOs maximize funds for charitable activities while encouraging greater public contributions through tax incentives.

LegallensIndia offers complete assistance in obtaining both 12A and 80G Registration, ensuring a smooth registration process and complete compliance with the Income Tax Act.

What is 12A and 80G Registration?

Sections 12A and 80G of the Income Tax Act, 1961 provide tax-related benefits to charitable institutions and their donors. These registrations are essential for NGOs, Trusts, Societies, and Section 8 Companies engaged in charitable or religious activities.

While Section 12A provides tax exemption on the income earned by the organisation, Section 80G allows donors to claim deductions on donations made to eligible organisations.

12A Registration

Registration under Section 12A of the Income Tax Act allows eligible charitable organisations to claim exemption from paying income tax on their surplus income.

Once registered, the organisation is not required to pay tax on grants, donations, or other income, provided such income is utilised exclusively for charitable or religious purposes.

This registration enables NGOs to maximise the funds available for their welfare activities and long-term social impact.

80G Registration

Section 80G Registration primarily benefits donors rather than the organisation itself.

Individuals, companies, and other entities making donations to an organisation registered under Section 80G can claim deductions on their taxable income as prescribed under the Income Tax Act.

This encourages charitable donations and helps organisations raise more funds for carrying out their objectives.

Difference Between 12A and 80G Registration

• 12A Registration: Provides income tax exemption to the charitable organisation on its income.
• 80G Registration: Allows donors to claim tax deductions on donations made to eligible organisations.
• Together, both registrations improve the financial sustainability of NGOs by offering benefits to both the organisation and its donors.

Who Can Apply for 12A and 80G Registration?

The following categories of non-profit organisations are eligible to apply for Section 12A and 80G Registration.

• Charitable Trusts.
• Registered Societies.
• Section 8 Companies.
• Religious Organisations.
• Educational Institutions.
• Medical Institutions.

Eligibility Criteria for 12A Registration

Organisations must satisfy the following conditions to obtain registration under Section 12A.

• Nature of Organisation: The organisation should be established exclusively for charitable or religious purposes as defined under Section 2(15) of the Income Tax Act.
• Charitable Activities: Activities must be carried out solely for charitable objectives without benefiting any individual or specific group.
• Legal Registration: The organisation should be legally registered as a Trust, Society, or Section 8 Company.
• Income Utilisation: Income and assets should be utilised exclusively for charitable or religious purposes.
• Financial Records: Proper books of accounts and financial documentation should be maintained.
• Income Tax Compliance: Annual Income Tax Returns should be filed even if the organisation enjoys tax exemption.
• Political Neutrality: The organisation should not participate in or support political activities.

Eligibility Criteria for 80G Registration

Organisations applying for Section 80G Registration must satisfy the following eligibility conditions prescribed under the Income Tax Act.

• Nature of Organisation: The organisation must be a registered Trust, Society, or Section 8 Company established for charitable or religious purposes serving the public interest.
• 12A Registration: The organisation should already possess valid registration under Section 12A (or Section 12AB) of the Income Tax Act.
• Utilisation of Funds: The governing documents should clearly specify that the income and assets of the organisation will be used only for charitable purposes.
• Inclusive Activities: The benefits of the organisation should not be restricted to any particular religious community or caste.
• Proper Accounting: Accurate books of accounts and financial records must be maintained to ensure transparency and accountability.

Additional Points

• Public religious trusts are eligible for 12A registration, whereas private religious trusts are not eligible.
• Activities involving advancement of general public utility should not involve substantial commercial activities unless such income is incidental and does not exceed the prescribed limits.

Benefits of 12A and 80G Registration

Registration under Sections 12A and 80G offers numerous financial and operational benefits to charitable organisations.

• Tax Benefits for Donors: Donors can claim income tax deductions on eligible donations made to organisations registered under Section 80G.
• Enhanced Credibility: Registration under Sections 12A and 80G enhances the credibility and trustworthiness of the NGO among donors, government authorities, and funding agencies.
• Improved Fundraising: Tax benefits encourage individuals and corporate entities to contribute more generously, increasing fundraising opportunities.
• Government Grant Eligibility: Many Central and State Government grant schemes require NGOs to possess valid 12A and 80G registrations.
• Long-Term Sustainability: Tax exemptions and donor incentives contribute towards building sustainable funding sources for charitable organisations.
• Efficient Financial Management: Registered organisations maintain better financial discipline and ensure that funds are utilised exclusively for charitable objectives.

Validity of 12A and 80G Registration

The validity of registration depends upon the type of registration granted by the Income Tax Department.

• Provisional Registration: Valid for a period of 3 years.
• Regular Registration: Valid for a period of 5 years.
• Renewal applications should be filed at least six months before the expiry of the current registration to ensure uninterrupted tax benefits.

Documents Required for 12A and 80G Registration

The following documents are generally required while applying for registration under Sections 12A and 80G.

• Trust Deed, Society Registration Certificate, or Section 8 Company Incorporation Certificate.
• Memorandum of Association (MOA) and Articles of Association (AOA) for Section 8 Companies.
• PAN Card of the organisation.
• Bank Account Statement of the organisation.
• Audited Financial Statements for the last three years.
• List of Trustees, Members, or Directors.
• Details of charitable activities carried out by the organisation.

12A and 80G Registration Process

The Finance Acts of 2020 and 2021 introduced a revised registration process through Form 10A for obtaining registration under Sections 12A and 80G of the Income Tax Act.

Step 1: NGO Formation and Registration

Select the appropriate legal structure such as Trust, Society, or Section 8 Company and complete the registration with the relevant authority before applying for tax registrations.

Step 2: Document Preparation

Collect all the necessary documents including registration certificates, Trust Deed, MOA/AOA, audited financial statements, NGO Darpan Registration, FCRA Registration (if applicable), and other supporting documents.

Step 3: Filing Form 10A

Submit Form 10A electronically through the Income Tax e-Filing Portal along with all the prescribed documents for obtaining provisional registration under Sections 12A and 80G.

Step 4: Verification by the Income Tax Department

The Income Tax Department examines the application and supporting documents. If any clarification or additional information is required, the applicant must furnish the requested details within the prescribed time.

Step 5: Grant of Provisional Registration

Upon successful verification, the Commissioner of Income Tax grants provisional registration under Sections 12A and 80G. The provisional registration generally remains valid for a period of three years.

Step 6: Apply for Regular Registration

Before the expiry of the provisional registration, the organisation must apply for regular registration. The application should be submitted at least six months before the expiry of the provisional registration or within six months from the commencement of charitable activities, whichever is earlier.

Step 7: Grant of Regular Registration

After detailed examination of the charitable activities, financial records, and statutory compliance, the Income Tax Department grants regular registration under Sections 12A and 80G, which is generally valid for five years.

Compliance After Registration

Organisations registered under Sections 12A and 80G must continue to comply with the provisions of the Income Tax Act to retain their tax benefits.

• Maintain proper books of accounts and financial records.
• Utilise income and donations exclusively for charitable or religious purposes.
• File Income Tax Returns within the prescribed due dates.
• File the prescribed annual statements relating to donations received under Section 80G.
• Ensure that at least 85% of the income is applied towards charitable objectives within India.
• Apply for renewal of registration before the expiry of the validity period.

Obtain 12A and 80G Registration with LegallensIndia

LegallensIndia provides complete assistance in obtaining registration under Sections 12A and 80G of the Income Tax Act. Our experienced professionals help Trusts, Societies, and Section 8 Companies prepare documentation, file Form 10A, respond to departmental notices, and secure registration without unnecessary delays.

From NGO formation to post-registration compliance, we provide end-to-end support so that your organisation can focus on its charitable mission while we handle the legal and procedural requirements.

Partner with LegallensIndia today and obtain your 12A and 80G Registration quickly, accurately, and in complete compliance with the latest Income Tax regulations..