It is a registration done by NGO to get an organization income exempted from Tax. All income shall not be taxable after 12A registration. If NGO does not get 12A Registration, income tax is payable on surplus during the year.
Once the Trust Organization or NGO is established, they have to register as per Section 12A of the Income Tax Act for claiming exemption under Section 11 and 12 of the Income Tax Act. Section 12A enables non-profit entities such as Charitable Trusts, Non-Profit Organisation, Welfare Societies, Religious Institutions etc to claim full tax exemption as per Section 11 and 12 of the Income Tax Act, 1961. The non-profit entities do not work for profit, rather for the welfare of the people and the society, and are hence, non-profits. As their work is considered a selfless act and they essentially do the work that the government ought to do, they are provided with tax-exemptions.
If any non-profitable trust or NGO has not registered for 12A, their financial receipts or transactions would be considered as taxable.
Private or family trusts are not allowed such exemptions and cannot obtain 12A registration.
The donor can receive tax exemption on the donated amount if the trust or NGO where the donation is done is being registered with Section 80G. When the donor donates from their income towards the trust or NGO, they can get tax exemption on that amount. Section 12A registered trusts or NGOs can also receive multiple benefits under registration of Section 80G. By registering for Section 80G, trust and NGO tend to increase their value and respect due to which donors are more confidently able to donate large amounts towards them. Donors feel a sense of humanity and satisfaction by donating to such renowned trusts or NGOs. The government funds and grants are easily available to such trusts and NGOs which are registered with Section 12A and Section 80G. The donor can donate only the 50% of their total income in order to receive the tax exemption.
The prior requirement for getting registration under section 80G is obtained registration under Section 12A.
The application shall be made in Form 10G to the Income Tax Commissioner. The application shall contain the following documents:
The registration process may take time up to 3 to 4 months. The Registration done once is valid for lifetime.
Can file application after 2 Years of NGO Starts its Operation.
Photos of activities done by NGO.
Resolution for the 12A, 80G Registration
Even if the trusts and NGOs are registered, there are some terms and guidelines related to Section 12A and Section 80G. These are:
The grants received from the government and other agencies are beneficial for such trusts and organizations. Such grants can be used for the infrastructure development, basic facilities, health and hygiene, and overall welfare of the society. These are registered under Section 12A which exempts them from paying income tax.
Sections 12A and 80G are the most appreciable Sections in the Income Tax Act which directly and indirectly provide a lot of benefits to society. The only requirement that trusts and NGOs should fulfil is that they should follow the guidelines provided in these Sections. Various trusts and NGOs which are registered under these Sections provide maximum overall benefits to the economic development of the country through their constant social welfare. It is necessary for trusts, NGOs, and societies involved in religious or social welfare work to get themselves registered under Section 12A of the Income Tax Act by the Department of Income Tax, Government of India.