80G& 12A
About 80G& 12A
- 12A Registration: 12A registration is obtained by NGOs under Section 12A of the Income Tax Act, 1961. It provides tax exemption to these organisations on the income they earn from grants, donations, and other forms of unconditional contributions. The registration is mandatory for all NGOs willing to avail the benefits of Section 12A.
- 80G Registration: 80G registration is obtained by NGOs to enable their donors to claim tax deductions on contributions they make to these organisations. The purpose of 80G registration is to encourage more and more donations for NGOs to support their welfare activities. This registration is voluntary and can be obtained only after 12A registration.
Section 12A of the Income Tax Act
Section 80G of the Income Tax Act
Eligibility for 12A and 80G Registration
Nature of the Organization: 12 A Registration is applicable to trusts or institutions established wholly for charitable or religious purposes only. Charitable purposes are defined under Section 2(15) of the Income Tax Act as relief of the poor, education, yoga, medical relief, preservation of environment (including watersheds, forests and wildlife), preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility. The organisation’s activities must be directed towards these purposes.
Charitable Activities: The organisation must be engaged in activities that fulfil its charitable objectives. These activities should not be aimed at generating profits for the benefit of any particular individual or group.
Registration: The organisation should be registered as a trust or a society under the appropriate laws. Alternatively, if it is a Section 8 company, it must be constituted under the Companies Act, 2013. Proof of their constitution needs to be submitted as part of the application for 12A registration.
Utilisation of Income: The organisation should not apply its income or assets, directly or indirectly, for the benefit of its members or any other specific individuals. The income should be utilised solely for charitable or religious purposes.
Maintenance of Books and Accounts: The organisation is required to maintain proper books of accounts and other relevant documents to reflect its income, expenses, and activities.
Regular Filing of Returns: The organisation must file its annual income tax returns under section 139 of the income tax act in a timely manner, even if it’s eligible for exemption. This is necessary to maintain its tax-exempt status.
No Political Activities: The organisation should not engage in any political activities or support any political party or candidate. Engaging in political activities can lead to the cancellation of Section 12A registration.
Nature of Organisation: 80G Registration is only applicable to non-profit organisations like registered trusts, societies, and section 8 companies established for charitable or religious purposes. These purposes must be adhered to the public and not to any private individual or group of individuals. Refer to the meaning of Charitable purposes under Section 2(15).
Organisation must be Registered under Section 12A: The income of organisations seeking 80G registration must be tax exempted under Sections 11 and 12 of the Income Tax Act. For this the organisation must possess the 12A registration certificate.
No Non-Charitable Use of Income: The constitution or governing rules of the institution or fund should explicitly restrict the use of its income and assets. This restriction ensures that the funds generated through charitable activities are dedicated solely to those activities.
Non-Exclusivity of Beneficiaries: For an institution to be eligible for Section 80G registration, it should not be established solely for the benefit of a particular religious community or caste. This condition is in place to ensure that the benefits of charitable activities are spread across a broader spectrum of society, rather than being limited to a specific group.
Regular Accounting: Organisations seeking 80G registration are required to maintain proper and regular accounts of their financial transactions. This practice is fundamental to demonstrating transparency and accountability in the use of funds. By maintaining comprehensive records of income received and expenditures incurred, the organisation provides a clear overview of its financial activities.
- Applicability of 12A Registration to Religious Trusts: 12A registration is applicable to Public Religious Trusts only, and not to trusts or NPOs established for private religious purposes. Religious purposes entail the advancement and propagation of a particular religion and its tenets.
- Meaning and Scope of Activities for General Public Utility: Activities for general public utility does not involve activities carried out in the nature of trade, commerce, business unless such activity is carried out for the advancement of the object of general public utility itself. Also, the aggregate receipts from such activity or activities must not exceed 20% of the institution’s receipts in the previous financial year.
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Documents Required for 12A & 80G Registrations
Here’s a complete list of documents required for 12A and 80G registrations in India.
| No. | List of Documents Required for 12A and 80G Registration |
|---|---|
1. | Where the trust or institution is created under an instrument, a self-certified original copy of such instrument |
2. | Where the trust or institution is not created under an instrument, a self-certified document evidencing its creation |
3. | Self-certified Registration Certificate of the Institution, along with Memorandum of Association / Bye Laws, whichever applicable |
4. | FCRA Registration Certificate, if the entity is registered under FCRA |
5. | Two copies of the annual Accounts of the Trust or Institution for the last three financial years, if the application is filed later than the financial year during which the trust or institution is created. |
6. | If the total income without taking into account Sections 11 and 12 exemptions exceeds the amount of non-taxable income, an audit report of the previous year’s accounts by a Chartered Accountant has to be filed in Form 10 B, 1 month prior to the filing of Income Tax Returns under Section 139. |
7. | NGO Darpan ID |
How to Get 12A and 80G Registration?