What is a Section 12A Registration?
Section 12A of the Income Tax Act provides tax exemptions for non-profit organizations, including trusts, societies, and Section 8 companies. Registration under Section 12A is essential for NGOs to claim exemption from income tax on the surplus income.
Key Features of Section 12A
- Tax Exemption: Grants exemption from income tax on the surplus income of NGOs.
- Eligibility for Other Exemptions: Essential for claiming benefits under other sections like 80G.
- No Time Limit for Application: Can be applied for at any time after the establishment of the NGO.
- Retroactive Benefits: Exemption benefits can be claimed retroactively from the date of establishment, provided the application is made within one year of establishment.
Benefits of Section 12A Registration
- Tax Relief: Provides income tax relief on surplus income.
- Increased Credibility: Enhances the credibility of the NGO among donors, beneficiaries, and other stakeholders.
- Eligibility for Government Grants: Many government grants and schemes require 12A registration.
- Access to Foreign Funding: Facilitates easier access to foreign funding under the Foreign Contribution Regulation Act (FCRA).
Required Documents for Section 12A Registration
- Application Form 10A.
- Self-Certified Copy of Trust Deed or MOA and AOA.
- Self-Certified Copy of Registration Certificate of Trust/Society/Section 8 Company.
- PAN Card of the NGO.
- List of Trustees/Directors with their PAN and Aadhar.
- Details of Activities Conducted.
- Financial Statements (Balance Sheet, Income & Expenditure) for the last three years or since inception.
What is a Section Section 80G Registration?
Section 80G of the Income Tax Act allows donors to an NGO to claim tax deductions on donations. NGOs registered under Section 80G are eligible to receive donations that are tax-deductible for the donors.
Key Features of Section 80G
- Tax Deduction for Donors: Donors can claim deductions on donations made to the NGO.
- Attracts More Donations: Increases the likelihood of receiving donations due to tax benefits for donors.
- Enhanced Credibility: Adds credibility and trustworthiness to the NGO.
Benefits of Section 80G Registration
- Increased Donations: Encourages more donations by providing tax benefits to donors.
- Higher Credibility: Enhances the NGO's reputation and trust among donors and the general public.
- Compliance with Legal Requirements: Ensures compliance with tax regulations and legal requirements.
Required Documents for Section 80G Registration
- Application Form 10G.
- Self-Certified Copy of 12A Registration Certificate.
- Self-Certified Copy of Trust Deed or MOA and AOA.
- PAN Card of the NGO.
- List of Trustees/Directors with their PAN and Aadhar.
- Details of Activities Conducted.
- Financial Statements (Balance Sheet, Income & Expenditure) for the last three years or since inception.
Conclusion
Obtaining 12A and 80G registrations is crucial for NGOs to benefit from tax exemptions and attract more donations. These registrations not only provide tax relief but also enhance the credibility and trustworthiness of the organization. By following the steps outlined above and maintaining the necessary documentation, NGOs can successfully register and benefit from the provisions of Sections 12A and 80G. For more detailed assistance with the 12A and 80G registration process, feel free to contact us at ATHWISE Services Private Limited. Our expert consultancy team can guide you through the documentation and application process efficiently.
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