12 A and 80 G certificate online
Income Tax Act in India contains provisions which say that donors get the tax benefit when they support NGOs financially. NGOs and other nonprofitable organizations in order to provide tax benefits to donors needs to get itself registered under 12A and 80G.
Overview of 80G and 12A Registrations
As NGO and the nonprofitable organization attracts a large number of individual and corporate businesses for charity purposes who are looking to save taxes, therefore it is important for NGOs to get 80G and 12A registration. Let’s understand these provisions one by one
So why does an NGO need 80G and 12A registration?
1. can avail income tax exemption by getting itself registered and fulfilling certain other formalities, but such registration does not provide any benefit to the person making donations.
2. To provide income Tax benefits to the “donors”, all NGO’s must apply for 80G & 12A certification. If an NGO gets itself registered under section 80G & 12A then the person or the organization making a donation to the NGO will get a deduction of 50% of donation amount from taxable income.
3. An NGO is applicable for government funding only if it is registered under 80G & 12A.
4. A newly registered NGO can also apply for 80G & 12AG registration.
5. NGO does not have to pay tax for the entire lifetime if it gets registered under section 80G & 12A.
6. An NGO can apply for 12A certification and 80G certifications just after the registration of an NGO.
7. Decision: – Is an 80G certification required for your NGO to attract more donors.
The registration process may take time up to 3 to 4 months. The Registration done once is valid for a lifetime.
What is 80G Registration for an NGO?
Under the Income Tax Act, some donations are eligible for a tax deduction under Section 80G. NGOs or other non-profits must have 80G certificates in order to qualify as an organization that can pass on tax benefits.
The application is carefully checked by the IT Department before being granted such a certification. It is obvious due to the fact that fake claims might come up by fraudulent organizations. Registration under 80G is processed by the Commissioner of Income Tax. The registration process may take time up to 3 to 4 months. The Registration done once is valid for a lifetime
Eligibility for 80G Certification
Not all NGOs non-profit making organizations eligible for 80G certification. There are certain rules which need to be followed to obtain it. So here are some important criteria:
1. As a non-profit organization, if the entity is involved in any profit-making activities, it will have to segregate the profit-making and nonprofit making activities.
2. Charities with one community-focused or certain religious or business purpose are not granted 80G certification. Also, gifts made to trusts operating outside India (a foreign trust) are not eligible for a tax deduction.
3. The donations received should not be misused on any account or used for any other purpose other than for the charitable purpose as prescribed in the rule of NGO, not even to be used within the organization but only for the charitable purpose, it shall be used. Proper accounting of receipts and expenditure, auditing is done in the process of granting registration.
So make sure you have the right Chartered Accountant who is helping you. If your CA has prior experience in NGO work, then only go for it.
4. As mentioned in the above point, the accounting books and all transactions should be kept accurate as proof before applying for an 80G certificate.
These documents will be scrutinized by the IT department thoroughly before 80G certification is issued. Therefore having an experienced chartered accountant is this process is crucial.
Documents Required for 80G Registration
1. A detailed list of welfare activities
2. PAN card of NGO and Certificate of Incorporation
3. Form 10G
Click – Apply for NGO Registration
4. Memorandum of Association, (if Society or Section 8 company)
5. Trust Deed (if trust), List of Board of Trustees
6. Copy of utility bills (Water / Electricity/ House Tax Receipt-not older than 3 months)
7. NOC (No-Objection Certificate) from the property owner, if the office is located on a rented property
8.List of donors along with their PAN and complete address;
12A registration of NGO
In order to avail exemptions under Income Tax Laws, NGOs and non-profit making organizations must have a 12A certificate. So the purpose of the registration is to avail exemption from the payment of income tax. Section 8 company, Trust or society, must apply for a 12A certificate in order to claim tax exemption as provided by income tax laws.
Eligibility for 12A Registration
- If an NGO is carrying on activities related to profit-making activities then the benefits granted under this section are restricted. In such cases, registration is granted exclusively if the receipts from the trade activity are less than twenty percent of the total receipts of the organization
- Also, it may be noted that 12A Registration is not applicable for Private or Family Trusts. The activities of the NGO should be genuinely for the benefit of the public.
- The accounting books and all transactions should be kept accurate as proof before applying for an 80G certificate. These documents will be scrutinized by the IT department thoroughly before 80G certification is issued. Therefore having an experienced chartered accountant is this process is crucial
Documents Required for 12A Registration
1. Memorandum of Association, (if Society or Section 8 company)
2. Trust Deed (if trust), List of Board of Trustees
3. A detailed list of welfare activities
4. PAN card of NGO and Certificate of Incorporation
- Annual financial statements for three preceding financial years
6. Copy of utility bills (Water / Electricity/ House Tax Receipt-not older than 3 months)
7. NOC (No-Objection Certificate) from the property owner, if the office is located on a rented property
Frequently Asked Questions
What are the eligibility criteria for any NGO to obtain 12A and 80G certificates?
1. NGO income or assets shall be exclusively for the purpose of charity.
2. Proper books of accounts of the NGO should be maintained, including all receipts and expenditures.
3. NGO should not be formed with the benefit of a specific religious community or caste.
4. NGO should have the core objective of charitable purposes, and the whole income should be from donations. If in case, NGO has a business income then the trustee of the NGO should maintain separate books of accounts to ensure that NGO should not divert donations received
What is the 80G Registration Procedure?
1. 80G certificate application is submitted to the Commissioner of Income Tax for further scrutiny
2. Once the applicant submits the form and the required documents for 80G registration, the next step is the on-the-premise inspection of the Income Tax department. During the inspection process, income tax department officials might ask for additional documents and evidence.
3. On successful verification and scrutinizing of documents and evidence, the 80G certificate is granted
What are the documents required for 80G Certificate & 12A Registration?
1. Copy of PAN Card of the organization.
2. Duly filled in Form – 10G.
3. Trust Deed or COI depending on the type of NGO
4. List of donors along with their address and PAN.
5. List of the governing board of trustee’s members along with their contact details
6. Address proof of Registered office
Can 80G and 12A be registered online?
Yes, You can simply get in touch with CAonWEB and get everything done online at the best price with experienced CA’s in India.
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