Registering with and fulfilling specific requirements enables a non-governmental organization (NGO) to qualify for income tax exemption. However, it’s essential to note that this registration doesn’t directly benefit those contributing donations. 80G Registration of The Income Tax Act includes provisions that extend tax benefits to the actual donors. By obtaining 80G registration, an NGO provides an incentive for potential donors. Individuals or organizations making donations to the registered NGO can benefit from a 50% deduction from their taxable income.
Getting an 80G Registration certificate signifies that an entity has been officially registered and acknowledged by the Income Tax Department, making it eligible to receive tax-exempt donations. Donors supporting these organizations can avail deductions on their taxable income, subject to a defined limit corresponding to the donated amount.
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Provisional Registration of 80G:
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 80G 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 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 80G 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 80G Registration after provisional registration?
The Provisional 80G 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 80G 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.
- Profits should not be stored aside for future investments or other uses.
- Prevent trustees or governing bodies from benefiting unduly.
Benefits of 80G Registration Certificate:
- Donor Attraction: By giving donors tax advantages for their contributions, 80G registration aids NGOs in attracting donors.
- Income Exemption for Donors: Donors can deduct the amount they’ve given from their overall taxable income, which relieves them of some of the burden.
- Increased Funding Potential: An NGO’s prospects of acquiring more funding and support are increased when it has an 80G registration, which increases its credibility and dependability.
- Wider Donor Base: The 80G Certificate for NGO broadens the possible donor base because people and corporations are more willing to give to NGOs that have this certification.
- Long-Term Support: Because donors can receive tax benefits on their contributions to an NGO with 80G registration, they are more likely to make recurring contributions to that organization.
- Funding for corporate social responsibility (CSR): Companies who want to meet their CSR responsibilities prefer to sponsor NGOs that have 80G registration since those organizations’ donations are acceptable to satisfy CSR criteria.
Which Form is used for 80G 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 80G registration 6 months before its expiry
- A new registration for objects that have been modified.
- Newly established trust which has commenced its activities
80G Registration Documents Required:
- 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 registration applications must be submitted with the entity’s three-year audit report.
- Objectives: The entity must specify its goals for obtaining 80G 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 80G 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 of 80G Registration is done.
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