Online 80G/12A Registration

One of the major registration processes for an NGO in India is receiving registration under 12A. Once that is done the major benefit is that you can seek to register under 80G of the Income Tax Act.

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What is an 80G Certificate?

An 80G Certificate is issued by the Income Tax Department to a non-governmental organization (NGO) such as a charitable trust, or a Section 8 Company. The 80G Certificate is granted to encourage the donors to donate funds into such non- profit organizations. Furthermore, the donor gets a tax exemption of 50% when they make donations to such organization, as they become eligible to deduct such amount from their Gross Total Income. Additionally, in order to avail the exemption, the donor needs to attach the stamped receipt of the donation made. Such a receipt must contain the donor’s name, date of donation, and PAN of the organization.

The circular benefit of this registration would be threefold:

  • As a society bylaw, 80G certification makes your NGO become a promising prospect and enhances the value of the organization and confidence of those associated with it.
  • It effectively enables a donor to not just feel good about making a donation for a cause but also reap the tax advantage of lowering taxable income associated with it. Well, who doesn’t like freebies?
  • Only an NGO registered under both 12A and 80G is eligible for availing government funding.
  • Getting an 80G registration also helps in seeking foreign contributions.

Both applications can be applied together or it can also be applied separately also.

If some organization is willing to apply both applications separately, then application for registration u/s 12A will be applied first. Getting 12A registration is must for applying application for registration u/s 80G of Income Tax Act, 1961.

About 12A Registration

Now that we have covered the 80G Registration, we will know about Section 12A and how to get registered under Section 12A of the Income Tax Act, 1961.

Section 12 A of the Income Tax Act, 1961, is a onetime tax exemption provided to trusts, NGOs and Section 8 Companies. Organizations holding a registration under section 12A are exempted from paying taxes on their surplus income.

NGOs are organizations involved in charitable and non-profit activities. However, they do earn income and they are required to pay tax as per normal rates if not registered under section 12A, Income Tax Act.

Benefits of Registration under Section 12A

The benefits of getting a 12A Registration are as follows:

  • The income received will be exempted from taxation.
  • The fund that is used for charitable or religious purposes is termed as income application. It is nothing but the expenses on charitable or religious purposes while calculating the income of the trust.
  • The organization can avail benefits for accumulating or setting aside income. Provided it is not more than 15%.
  • The accumulation of income, that, otherwise, get included as income application according to Section 11(2), will not be included in the total income.
  • NGOs are entitled to receive grants and funds from various agencies, Government, as well as International. These agencies have been entrusted to provide grants to 12A registered NGOs.
  • Avail benefits under the Foreign Contribution Regulation Act, 2010 or FCRA.
  • The Finance Act of 2014 has extended benefits of registration for the trust, institution or a Section-8 Company that has been registered under Section 12A.
  • The 12A registration is a one-time registration. Once the registration is made, it will be active till the date of cancellation of the registration. There is no need for renewing the registration. Therefore, these benefits can be claimed, as and when required by the NGO.