12A and 80G registrations play a crucial role in the financial management of NGOs, offering both tax exemptions and incentives for donors. When an NGO registers under Section 12A of the Income Tax Act, it ensures that the organization’s income is exempt from taxation. Meanwhile, Section 80G registration allows donors to claim tax exemptions on their donations to the NGO, thus encouraging financial support.
The application for registration under sections 12AB and 80G can be submitted either together or separately. However, if applied separately, the organization must first secure 12AB registration before applying for 80G certification, as 12AB is a prerequisite under the Income Tax Act, 1961.
At Professional Utilities, our experienced team offers seamless 12A and 80G registration services. We handle all documentations and ensure a smooth process, leveraging our years of expertise in NGO registration and compliance. Whether you are applying for both registrations together or separately, our team will manage the process efficiently, allowing you to focus on your organization’s mission.
What is 12A & 80G Registration
12A and 80G registration are vital for NGOs in India to secure tax benefits and encourage donor contributions. Under Section 12A of the Income Tax Act, an NGO can apply for tax exemption on its income, meaning that any income generated by the organization will not be subject to taxation, allowing more resources to be directed towards its activities and social goals. Section 80G registration, on the other hand, benefits donors by allowing them to claim tax deductions on the donations they make to the NGO. This certification not only attracts donors but also enhances the credibility of the NGO.
Both registrations can be applied for together or separately, but obtaining 12A registration is mandatory before applying for 80G. This legal requirement ensures that the organization’s income is first exempted before providing tax incentives to its donors. These registrations are essential for NGOs seeking financial stability and broader donor engagement.
Benefits of 12A & 80G Registration in Point Form
- Increased Trust and Credibility:
- These registrations provide legitimacy to NGOs, promoting transparency and ensuring donor confidence.
- Increased Funding Potential:
- Tax exemptions encourage individuals and corporations to make larger contributions, thus broadening the NGO’s financial base.
- Access to Government Grants:
- Many government agencies require 12A and 80G registrations to qualify for grants and funding opportunities.
- Long-term Sustainability:
- The ability to offer tax breaks to donors helps NGOs create sustainable funding streams for long-term projects.
- Efficient Resource Use:
- These registrations ensure that funds are used strictly for charitable and religious purposes, as reflected in the organization’s maintained accounts.
Minimum Requirements for 12A & 80G Registration
The minimum requirements for 12A and 80G registration are essential for NGOs to qualify for tax exemptions. First, the organization must be a registered NGO. Additionally, registration under Section 80G can only be applied for after obtaining 12A registration, as it serves as a prerequisite. The NGO should not generate income from any business activities, as the focus must be on charitable or religious purposes. Furthermore, the organization must maintain regular and accurate financial records, detailing all receipts and expenses, to ensure transparency and accountability. These requirements are fundamental to secure tax benefits and gain donor trust.
Documents Required for 12A & 80G Registration
- Copy of PAN of the NGO: Essential for tax identification.
- Registration Certificate & MoA: Required for Section 8 Companies.
- Trust Deed: Applicable for Trusts to validate their legal standing.
- Form 10A: Necessary for applying for registration under Section 12A.
- Form 10G: Needed for registration under Section 80G.
- Address Proof: Proof of the registered address of the organization.
- Utility Bills: Copies of electricity, water, or other utility bills as evidence of address.
- Books of Accounts: Financial records of the past three years or since the organization’s inception.
- Activity and Progress Reports: Reports showcasing the organization’s activities and projects over the past three years.
- List of Donors: Complete details of donors, including their contact information.
- Bank Statements: The bank account statements of the organization for the last three years.
12A Registration Process
- Online Application: Submit Form 10A online through the Income Tax Department’s website (incometaxindiaefiling.nic.in) to apply for 12A registration.
- Accessing the Form: The 12A application form can be accessed under the Income Tax Forms section on the website, available through the e-file menu after logging in.
- Document Verification: Upon receiving the application, the Commissioner of Income Tax reviews the documents and evaluates the NGO’s activities to ensure their authenticity. Additional documents or information may be requested if necessary.
- Order Issuance: After the verification process, the Commissioner issues a written order granting 12A registration. If the application is not approved, the applicant is given an opportunity to present their case before a final decision is made.
80G Registration Process
- Application Submission: The application for 80G registration is made using Form 10G. This form, along with the required documents, must be submitted to the Jurisdictional Principal Commissioner or Income Tax Commissioner (Exemptions).
- Document Verification: Upon receiving the application, the Commissioner reviews the submitted documents and assesses the authenticity of the NGO’s activities. Additional documents or information may be requested if deemed necessary.
- Issuance of Order: After thorough verification, the Commissioner issues a written order granting 80G registration. If the Commissioner is not satisfied with the application, it will be rejected, but the applicant will be given an opportunity to present their case before the final decision is made.
12A & 80G Registration Fee
- The total registration fees for 12A & 80G is ₹9,999 only.
- The application for registration is filed within 5-10 days
- Total time for approval by the Jurisdictional Principal Commissioner is 20-30 days
- Note: The aforementioned Fees is exclusive of GST
Validity of 12A & 80G Certificate
The registrations granted for the first time under Sections 12A and 80G are provisional and only valid for three years. A renewal application for this provisional registration must be submitted either 6 months before the validity period expires or within 6 months of the start of operations, whichever is earlier. Renewed registrations are valid for five years at a time.
12A & 80G Registration Online
Registering your organization under Sections 12AB and 80G can be a complex process, requiring compliance with several regulations. At Professional Utilities, we make the registration process easy and efficient. Our experts guide you through the entire procedure in just three simple steps:
Step 1: Fill out our easy-to-use form, and our team of experts will contact you for a consultation.
Step 2: Submit the required documents and make an advance payment of 50% of the fee.
Step 3: Once the registration process is complete, you can make the remaining balance payment, and your 12AB and 80G registration will be finalized.
Conclusion
In conclusion, obtaining 12A and 80G registrations is a crucial step for NGOs seeking to benefit from tax exemptions and enhance their credibility. These registrations not only ensure that your organization’s income is tax-exempt but also allow donors to claim tax deductions on their contributions, which can significantly boost fundraising efforts and support long-term sustainability.
By partnering with Professional Utilities, you can simplify this complex process. Our team of experts will guide you through every step, from initial application to final approval, ensuring that all compliance requirements are met efficiently. Trust us to handle the paperwork and procedures, allowing you to focus on your organization’s mission and impact.