Overview of 12A and 80G registrations

12A and 80G registrations are tax registrations that are issued by the Income Tax Department to NGOs so that the Income of the NGO gets exempted under 12A and the donors get the benefit of tax exemption on the donation that they give under section 80G of the Income Tax Act. These two registrations have become almost mandatory for any genuine trust, society, or Section 8 company that is operating in the not-for-profit sector. The charitable or religious institution (trust, society, section 8 company, NGO) is eligible to obtain complete tax exemption on eligible income, subject to certain conditions, in order to utilise the funds spent on objects, as opposed to income tax. The section 80G registration makes eligible persons contributing to recognised institutions eligible to reduce their taxable income on the contribution made, subject to certain exemptions. The process of acquiring both registrations is through the online form 10A/ 10AB, and it is currently time-bound.

Benefits of for 12A and 80G Registration Online in India 

Some of the key advantages of above mentioned Registrations under the Income Tax Act are given below: 

• Exemption on taxes for income from NGO under section 12A, wherein the excess generated out of donations, grants, and specified activities is not taxed as a normal business income.
• "Donor tax benefits under section 80G, enabling persons and companies to deduct contributions, thus immediately lifting the attractiveness of raising funds."
• Greater donor confidence and credibility, since most Institutional, CSR, and HNI contributors prefer/insist on contributions to 12A-80G registered organisations.
• Eligibility for government as well as CSR funding in relation to these registration may be mandatory or greatly desired.
• Improved cash flows for charitable activities because of increased savings, thanks to tax optimisation for the NGO and its donors.
• Obtaining official recognition as a true charitable body after being examined by the Commissioner is useful for reputation positioning.
• Easier long-term planning, as funds assessed on objects remain exempted for a long time, as long as all requirements are fulfilled periodically.
• More transparency and discipline, in that registration and subsequent renewal necessitate appropriate accounting and activity reports, and filings.
• Being competitive in collaborations and partnership opportunities, as many networks and international and corporate funders shortlist only those NGOs that are compliant and tax-registered.
• Exemption from full taxes on receipts; without 12A, all income that the trust/NGO receives is subject to taxes under the normal rate.

Eligibility for 12A and 80G Registration Online in India 

In order to get this registration one must follow the eligibility criteria givemn below: 

• Entity type: Must be a not-for-profit entity. Must be one of the charitable or religious trusts, registered societies, or Section 8 Company.
• Charitable objects: The objects declared must be for “charitable purposes,” such as relief of poverty, education, medical relief, or environmental protection. They cannot be of pecuniary advantage to anyone.
• Non-Profit Nature: This implies profit shall not be shared with the membership; instead, the surplus goes to the objects of the organisation.
• Proper Registration: It is also necessary that there is proper registration of the trust deed, society registration, or Section 8 license.
• Books & Compliance: The company must keep proper books of account, undertake audits when called for, and file required income-tax returns or filings as applicable.
• Other conditions of 80G: No advantage for a certain religious community and/or caste in most cases, political activity, and income/assets not used for personal gain.

Timeline and Validity for 12A and 80G Registration Online 

Now, the registrations are not “permanent” but are valid for fixed intervals of time. Provisional registration, in most cases, is for up to 3 years for new entities, whereas normal 12A as well as 80G registration is for a validity of up to 5 years, which has to be renewed before the expiry of the specified period, normally done by filing Form 10AB at least 6 months prior to the date of expiry. The time taken for approval of registration will vary from 1 to 3 months, based on the scrutiny of the papers submitted.

Step by Step 12A and 80G Registration Process 

The step-by-step 12A and 80G registration process is given below:

• Step 1 - Preparation: Complete the legal registration of the trust/society/Section 8 and obtain the PAN number of the entity, and collect documents related to inception and finances.
• Step 2 – Online Application: Submission of Form 10A on the income tax e-filing portal for obtaining fresh registration under sections 12A & 80G.
• Step 3 - Examination and Inquiries: The Commissioner/Assessing Officer may call for further explanations, documents, and other information concerning the objects and activities.
• Step 4 – Verification/Inspections: In certain instances, the concerned authorities might check activities, inspect bank statements/account statements for appropriate evidence.
• Step 5 – Grant of Registration: If satisfied, the commissioner gives an order and registration certificate, for example, Form 10AC, with a distinct registration number and validity.
• Step 6 –12A and 80G Registration Renewal:  File Form 10AB within the stipulated advance period before the expiry of 12A and 80G to avoid discontinuation of benefits.

Documents Required for 12A and 80G Registration Online

Some of the key documents required for 12A as well as 80G Registration are given below:

• Registration certificate of the entity (trust deed, society registration certificate, or Section 8 incorporation).
• PAN card of NGO/Entity.
• Trust deed / MOA & AOA / rules and regulations, clearly stating charitable objects and non-profit nature.
• Information about trustees/directors/officers, ID/address proofs
• Audited financial statements and audit reports (usually up to three past years if available).
• Reports on activity / Annual reports on major charitable programs and beneficiaries.
• Details of the bank accounts and the cancelled cheque of the NGO.
• Details of registration as a beneficiary of government grants by the organisation in DARPAN (NITI Aayog).
• Those with existing registration orders, if applying under amended regulations.
• Any other licenses/approvals applicable to the operations, and self-certified copies of the important documents, as required in the Form 10A/10AB.

The 12A registration shields the NGO’s revenues from taxes, while the 80G registration provides rewards to contributors in the form of taxpayers: both services are crucial to successful resource mobilisation/impact, and both are now fundamental to being a serious trust, society, and Section 8 company to achieve these registrations and comply with them within stipulated timescales