12A and 80G
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The application is under sections “12A” and “80G” under the Income tax Act. So, take NGO tax benefits under sections 12A and 80G and refer to sections of the Income Tax Act, 1961. But which pertain to the application of non-profit organizations (NPOs) and non-governmental organizations (NGOs) for tax exemptions for Society, Trust and Section 8 Company.
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Documents required
- Certificate of Incorporation and MoA and AOA in case of Section 8 companies and Societies; Trust Deed in case of a Trust.
- No objection certificate from the owner of the property where the registered office of the Institution is located.
- PAN card copy of the NGO.
- Copy of Utility Bills – Electricity bills, water bills or House Tax Receipt.
- Donor list along with their complete address and PAN.
- Book of Accounts & Income Tax Return documents, of last three years.
- List of welfare activities being carried out & the progress report for last three years.
- Detailed list of the board of trustees.
12A of Income Tax Act
Section 12A of the Income Tax Act, 1961, obtains to the application of trusts, Societies and section 8 company for availing income tax exemptions. So, Section 12A is relevant for NGOs that operate for social activities purposes. Enrollment under Section 12A is necessary for such organizations to claim exemptions on their income.
80G of Income Tax Act
Section 80G of the Income Tax Act, of 1961, provides deductions for donations made to specified funds of charitable institutions and other certain entities. So, the purpose of Section 80G is to recommend individuals and businesses to contribute to charitable causes by offering them a deduction on the amount donated from their taxable income under the income tax.
12A & 80G Application Process
Document Collection
They will be needed for filing the 12A and 80G applications in Form 10A. So all these documents have generally included your certificate of entity, MOA / Bye Laws / Trust Deed, audited financial statements, NGO Darpan ID, etc. These documents will provide supporting evidence of your NGO’s existence and legitimacy.
Application Submission
Submit the duly filled Form 10A and the necessary documents to the submitted Income Tax portal. So because of this process is the submission to the formal initiation of your 12A/80G application. Keep hard and soft copies of all submitted documents for your records.
Review and Inspection
After your application is received, the tax authority will review its documents and details to verify that your NGO aligns with the conditions for Section 12A/80G application. Sometimes, they may inspect your entity’s activities and financial records to ensure compliance and authenticity.
Application Intimation
After successful enrollment, you will receive an official certificate from the income tax authority. This certificate confirms your NGO’s eligibility for tax exemption under Section 12A / 80G of the Income Tax Act, 1961. It’s a well-known document that establishes your entity’s allows you to avail of tax exemptions for your NGO as well as its donors.
12A & 80G Benefits
Tax Exemptions for Donors
NGO enrollment under Section 80G provides a significant incentive for donors, as contributions so made to these entities are eligible for tax deductions.
Enhanced Credibility and Trust
The Section 12A and 80G applications help a sense of credibility upon the entities and ensure transparency for donors.
Increased Fundraising Potential
The availability of tax benefits recommends individuals and corporate entities to contribute more generously to NGOs. This is an important part of the fundraising base of these entities.
Access to Government Grants
Many government bodies and agencies require NGOs to take control of 12A and 80G applications to be eligible for various assured grants and funding opportunities offered by them.
Long-Term Sustainability
With the ability to provide tax benefits to donors, NGOs can provide sustainable sources of funding and plan to execute long-term projects with lasting impacts.
Efficient Utilisation of Resources
The 12A and 80G enrollment are required for the use of funds for charitable and other social activities, as obvious through its regularly prepared books of accounts of entities.
Frequently Asked Questions
Firstly, Section 12A enrollment is an application applicable for registered non-profit institutions like trusts, societies. Section 8 companies established in India wholly for charitable and religious purposes only. So, the certification allows them to claim tax exemption on the income they receive in the form of grants and donations, provided they are used for charitable and religious purposes in India only.
According any application non-profit entity like a trust, society, and section 8 company set up wholly for charitable and religious purposes in India can apply for 12A enrollment in Income tax. However, as far as trusts are concerned, the enrolment applies only to public charitable and religious trusts and not to private trusts.
No but the 80G application can only be obtained after the concerned institution has obtained the 12A application.
So, Donors can avail tax deductions on their taxable income when contributing to NGOs with 80G enrollment, but making it an attractive incentive for supporting charitable causes.
According to 80G application encourages individuals and businesses to contribute then more generously owing to tax benefits received on such contributions. So, this expands the NGO’s fundraising potential and enables it to undertake larger and more impactful projects.
The application applies to a wide range of charitable purposes, including education, healthcare, poverty alleviation, and more. Both charitable and religious organizations can benefit, but they must meet specific eligibility criteria.
So, the process for 12A and 80G applications has been revised under Section 12AB of the Income Tax Act. But as per the new process, every existing NGO registered under 12A and 80G of the Act will have to re-register under Section 12AB in Form 10A. Form 10A is the new form for the 12A and 80G applications and has replaced the old forms, form 10, and form 10G.
Yes, an organization generating revenue can apply for 80G application, provided it maintains separate accounts for business activities, ensures that donations aren’t used for business, and issues certificates to donors confirming the same.
But, No government fees are charged for 12A and 80G registration. You will only have to pay our professional fees. Request our full quotation here.