Process and Benefits of 80G and 12A registration for your NGO

Updated on : 2021-Jun-14 15:33:12 | Author :

80G & 12A REGISTRATION FOR AN NGO

 

Introduction

An NGO is a non-governmental organisation which is a non-profit group that functions independently. It is also called civil societies are organized on community, national and international levels to serve a social or political goal such as humanitarian causes or the environment. NGO has a various interpretation but generally it is accepted as a non-profit organization operates outside of government control. As a non-profit organisation it relies on various funding, including Membership dues, Private donations, The sale of goods and services, Grants. Despite all these some NGO’s rely on government funding ad large NGOs may have budgets in millions or billions of dollars.

 

Registering an NGO in India is advantageous for several reasons and thus the most significant of them is being the rebate they get in taxation below two major section – the 80G and 12A.

 

80G Registration

 

80G Certificate is issued under tax Act, 1961 to NGO’s by tax Department.

 

The primary objective behind the grant of 80G Registration is to inspire a lot of donors to the organizations for donating funds.

 

Furthermore, the donors receive a 50% tax exemption on his total nonexcempt income. To avail this exemption, the donor must attach the sealed receipt against the donation issued by the NGO. One of the main registration processes for an NGO in India is receiving registration under 12A. Once that's done the main benefit is that you simply can seek to register under 80G of the tax Act. The advantage NGO registration confers is that the donor (that is that the person donating money) to the NGO will not be taxed for donating to your NGO. The donors can use this registration to scale back the quantity they donate to an NGO from their total taxable incomes.

 

80G Certificate is issued to a non-profit organization or non-governmental organizations (NGO), a public trust or a neighbourhood 8 Company by the tax Department. the target 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 because the donor is allowed to deduct their donations from their Gross Total Income.

 

12A Registration

 

12A registration may be a one-time registration which is granted by the tax Department to trusts and other not for profit organisations. the aim of the registration is to be exempted from the payment of tax. 12A registration is usually applied for immediately after incorporation. Section 8 Companies, Trusts and NGOs which have obtained 12A registration enjoy exemption from paying tax on their surplus income. The 12A registration facility is out there for all non-profit entities. Section 12A of the IT Act, 1962 doesn't differentiate between charitable and non-secular Trusts. Hence 12A registration is applicable to both the sorts of organizations. Hence, it's necessary for all Trusts, NGOs and other Not-for-Profit organisations to remember of Section 12A of the tax Act. the aim of this article is to debate the procedure for obtaining 12A registration.

 

Furthermore, 12A Certificate helps you to hunt permission from the govt and therefore the organizations abroad as 12A Registration acts as a legitimate proof of your NGO’s existence.

 

This society bylaw to register under 12A would also assist you in seeking grants from government or organizations abroad, because it is a legitimate proof of the existence and purposes of your NGO. it's also noteworthy that no matter whether the NGO is constituted as a trust, society or a not-for-profit company, it'll need to seek a 12A certification to avail tax exemption.

 

What is the difference between 12a and 12aa?


The tax Act, 1961, entails certain provisions that allow non-profit entities to say tax exemption. Section 12A of the Act enables certain organizations to say a one-time exemption on the tax to be paid. It's vital for all Trusts, NGOs and other not-for-profit organizations to remember of Section 12A and acquire registration under an equivalent, soon after their incorporation.

 

Whereas 12AA Registration may be a onetime registration which will exempt tax of an organisation. After this registration, all income can't be taxed. the appliance form which is employed to request for 12AA Registration is form 10A. the appliance takes about 3 or 4 months. Application for the aim of registration under section 12AA is often applied to the Commissioner of tax department (Exemption) having jurisdiction over the institution.

 

Finance Act, 2014 has extended the advantages of registration for prior years also. These benefits are extended to the trusts or institutions where the registration has been granted under section 12AA. There are various sorts of NGO’s, namely Section 8 Company, Trusts and Society that works for the welfare of our nation. Such organizations can avail various rewards like tax exemption by registering under Section 12AA.

 

The procedure for obtaining a registration requires several steps must be followed by the appliance to present properly and after submission to the relevant department. After two three months from submission, NGOs receive a notice for clarification. The response to clarifications is to be submitted to the respective tax department by the consultant along with side the supporting documents. The consultant is to go to the department personally to follow up the appliance status until the exemption certificate is issued to them.

 

Benefits of registration under 12aa

 

As per under section 12 AA of the tax Act, 1961 Trust, Society and corporation’s 8 are claim deductions on the amount of Donation received by them. For this purpose of these entities need to satisfy certain conditions in order that they will avail ‘Benefits of Registration 12A of the tax Act’1961’

 

Application process for 12a and 80g online

 

In order to get registration under Section 12A, the eligible organization must file Form 10A. Form 10A are often filed online if the applicant has digital signatures. If you're not required to have a digital signature to file your tax return online, you'll file Form 10A electronically through electronic verification code. the appliance for Section 12A registration is officially filed with the jurisdictional Commissioner of income tax.

 

Documents Required for 12A and 80G

 

Copy of Registration Certificate.
Copy of FCRA registration if any.
List of Main Objects.
Copy of deed of trust / Society Deed/MOA.
Copy of PAN.
Note on Activities.
Copy of last 3 years Audit Reports.
Copy of Documents evidencing modification of objects.
Copy of order of earlier rejection of 12A (If)


Online Application Fill (12A)

 

Log in to the portal of the Income Tax Department
Click on ‘Submit Returns/Forms’ option shown in the left-hand bar of the page.
Log in to your account using your user id and password and click on the ‘e-file’ option and choose ‘Income Tax Forms’ option shown within the menu.
Select Form 10A/12A option from the “Form Name” field. Also, select the assessment year and therefore the submission mode ‘Prepare and Submit Online’. Click on ‘Continue’.
Please read the instructions carefully before filling out the shape then click on ‘Submit’ to finish the method of Form 10A/12A submission.


80G Application

 

80G Certificate is issued to a non-profit organization or a public trust or non-governmental organizations (NGO), or a neighbourhood 8 Company by the tax Department. The intention behind issuing the 80G certificate is to market 50% tax benefits to donors in order that more and more donors can donate funds to those organizations.

 

Online Application Fill (80G)

 

80G certificate application is going to be submitted to the Commissioner of tax.
Once the applicant submits the shape and therefore the required documents for 80G registration, the next step is on-the-premise inspection, which is to be completed by the tax department. During the inspection process, tax department officials might invite additional documents and evidence if required.
 

However, the tax Officials might invite additional documents or evidence if they appear unfit, or if they feel anything is missing
Upon satisfactory verification of documents and therefore the office of the NGO, 80G certificate is granted to the institution by the Commissioner.
80G Certificate is valid for lifetime period.


Who can issue 80g certificate?

 

On receipt of the appliance, the Commissioner may pass a written order which might effectively register the trust/institution under Section 80G of the Income-tax Act. The Commissioner is additionally entitled to demand further documents from the applicant if the necessity for an equivalent is felt, or reject the appliance. The registration accorded to the trust is going to be valid for a period of one-three years.

 

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