Non-Governmental Organizations (NGOs) are pivotal contributors to societal development and well-being. These entities, whether trusts, societies, or section 8 companies, dedicate themselves to charitable or religious causes, striving to positively influence the lives of those in need. While managing a charitable organization in India is a noble pursuit, it often involves financial challenges. This is where 12A Registration of Section 12A of the Income Tax Act becomes relevant. To bolster their altruistic efforts, the Indian government extends specific benefits and tax exemptions to registered NGOs under Section 12A of the Income Tax Act.
Securing 12A registration empowers organizations to enjoy income tax exemptions pursuant to Section 11 of the Income Tax Act, enabling them to access more resources for fulfilling their mission. Additionally, this serves as an incentive for donors to claim deductions on their contributions under Section 80G of the Income Tax Act.
For any charitable organization, trust and credibility are indispensable assets. 12A registration elevates their standing through acknowledgment, attraction of donors, and partnerships with the government. Registration often paves the way for collaborations with government agencies and other reputable organizations.
Financial transparency stands out as another advantage of 12A registration. Registered organizations must maintain meticulous books of accounts and records, ensuring transparency in financial operations. Moreover, the registration process mandates compliance with legal requirements, guaranteeing that the organization operates within the bounds of the legal framework.
12A registration transcends mere compliance; it is a strategic maneuver with profound implications for the sustainability and efficacy of your charitable organization. The associated tax benefits, augmented credibility, and commitment to transparency collectively fortify your mission, making it more sustainable in the long run.
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Provisional Registration of 12A
Prior to amendment as per The Finance Act 2023, No distinguishment was made whether the new trust has already commenced its activities or not at the time of filing the application in Form 10A for 12A Registration. As a result, even a newly established fund or trust which has commenced its activities at the time of filing of an application was getting provisional approval of 12A & 80G Registration for a period of three years compared to a regular trust who is getting approval for a period of five years.
The Finance Act 2023 amended provisions of Section 10(23C), Section 12A and Section 80G to allow a trust or institution which has commenced activities for direct final registration and/or approval without applying for provisional registration/approval.
Newly established fund or trust which has not commenced its activities at the time of filing of an application shall apply for approval in Form 10A for 12A Registration and provisional approval will be granted to such trust or fund.
Newly established fund or trust which has commenced its activities at the time of filing of an application shall apply for approval in Form No. 10AB and regular approval for a period of 5 years will be granted to such trust or fund after verification.
When should we apply for permanent 12A registration after provisional registration?
The provisional 12A Registration has to convert for permanent registration six months before it expires or within six months from the date it begins its activities, whichever comes first.
Eligibility of 12A Registration:
- It must be a non-profit organization or a trust.
- Charitable services must be provided by your organization.
- Annual audits of your organization’s accounts are required.
- The organization should not receive any money from a business or profession, and any
- Profits should not be stored aside for future investments or other uses.
- Prevent trustees or governing bodies from benefiting unduly.
Benefits of 12A Registration Certificate:
- Eligibility for Government assistance: NGOs registered under 12A are able to apply for government assistance.
- Grants and Aid: NGOs may apply for grants and aid from both national and international organizations if they are registered under Section 12A.
- Continuity of Exemption: As long as an NGO adheres to the necessary laws, after it has 12A registration, it constantly enjoys tax exemption on its surplus income.
- Increases reputation: An NGO’s reputation and dependability in the eyes of donors, authorities, and other stakeholders are increased through 12A registration.
- Administrative Benefits: NGOs with 12A registration may be eligible for a variety of administrative advantages, including streamlined procedures for accepting funds from abroad and exemptions from some legal requirements.
Which Form is used for 12A Registration?
When to use Form 10A:
For provisional registration/approval under sections 12AB/10(23C)/80G for new cases which has not commenced its activities yet.
When to use Form 10AB:
- The conversion of provisional registration to permanent registration.
- Renewal of existing 12A & 80G registration 6 months before its expiry
- A new registration for objects that have been modified.
- Newly established trust which has commenced its activities
12A Registration Documents Requirement:
- Registration Certificate: For both 12A and 80G registration, a copy of the entity’s certificate of incorporation is needed.
- Trust Deed/MOA & AOA: Companies must submit their Memorandum of Association (MOA) and Articles of Association (AOA) as part of the registration process, whereas trusts must submit a copy of their trust deed.
- PAN Card: For entities registered as trusts, a copy of the trust deed is required, whilst for corporations, the Memorandum of Association (MOA) and Articles of Association (AOA) are necessary as part of the registration procedure.
- Audit Report: The 12A and 80G registration applications must be submitted with the entity’s three-year audit report.
- Objectives: The entity must specify its goals for obtaining 80G and 12G registration and ensure that they are in line with the guidelines in Sections 11 and 80G of the Income Tax Act.
- List of Trustees/Members: for trusts, a list of trustees and their contact information is required, whereas for corporations, a list of members and their information is required.
Validity of 12A Registration certificate:
- Validity of The provisional registration is six months before it expires or within six months from the date it begins its activities, whichever comes first, after that it has to apply for permanent registration.
- While Permanent registration is valid for 5 years until Renewal 12A Registration is done.
How can Our Company help you?
Our Company specializes in simplifying and expediting the 12A and 80G registration process for Trusts and Charitable Institutions. We offer a wide range of services, including 12A and 80G registration certificate for trust, Form 10A/10AB applications, re-registration, provisional registration, and renewal support.
Our experienced team is well-versed in 80G and 12A approval matters. Contact us for efficient and hassle-free assistance with your registration needs, so your organization can focus on its essential charitable work.