How to File 12A and 80G Registration Online?

Registering an NGO in India is beneficial for many reasons. The first idea is the rebate received in Income Tax under Section 12A and 80G. NGOs with 12A Registration can claim a full exemption from the Income Tax department. NGOs with 80G The certification attracts more donors for donating funds to the organization. If NGOs don't get such registrations, they are subjected to regular Tax Rates. Furthermore, attracting donors for donations becomes difficult. By getting registered under 12A NGOs don't have to pay tax for the entire lifetime.

What is 12A Registration?

12Aregistration is a one-time exemption, which is a permission granted to trusts, NGOs, and Section 8 companies by Income Tax Act, 1961. Organizations involved in charitable and non- profit activities do earn income and are required to pay taxes as standard rates if not registered under Section 12A.

What do you mean by the 80G Certificate?

The Income Tax Department issues 80 G to an NGO, a charitable trust, or a Section 8 Company. The 80G Certificate is established to inspire the donors to donate funds into non- profit organizations. Also, the donor gets a tax exemption of 50% when they make donations to such an organization, as they become eligible to deduct such amount from their Gross Total Income. Moreover, to benefit the exemption, the donor is required to attach the stamped receipt of the donation made by them. Such receipt should contain the donor’s name, date of the contribution, and PAN of the organization.

What are the benefits of 12A Registration?

•      The funds used for charitable purposes are considered to be the application of income; this refers to the expenses used for charitable purposes for calculating the taxable income of the NGOs;
•           The income received is exempted from paying tax;
•      The person can avail of the benefit of setting aside income. The income set aside should not be more than 15% of the amount towards charitable purposes.
•       Once Registration is done, it is valid for a lifetime until canceled.

Who are eligible for 12A Registration?

What are the documents necessary for 12A Registration?

Documents Required for Registration of 12A-

• A self-attested copy of the instrument which has to be used to create the trust should be submitted.
• A self-attested copy of the document supporting the formation of the trust has to be submitted to the Income Tax Department.
•        A self-attested copy of the Registration, which was done with the applicable body.
•    A self-attested copy of the documents to provide evidence for the adoption or modification of the objectives of the company.
•        Annual financial statements for three preceding fiscal years
•       The activities conducted by the company
•     In some instances, the Income Tax department may cancel the Registration granted. After correcting the default, the assessee is allowed to make a subsequent application. 

What are the Documents Mandatory for the 80G Registration?

The following documents are essential for 80G Registration are-

•          Memorandum of Association.
•          Registration certificate in case of Section 8 company and Societies registration
•          Trust Deed in case of a Trust
•          NOC from the owner of the property where the registered office is situated;
•          Form 10G;
•          PAN of the NGO;
•          Copy of Utility Bills;
•          List of the donors with their address proof;
•          Documents related to Income Tax Returns of the past three years;
•          Book of Accounts for the past three years;
•          The list of welfare activities carried out;
•          List of the Board of Trustees;
•      Original Registration Certificate or Trust Deed.

What is the registration process for 80G Registration?

80G Registration process consists of the following steps-

•  Apply for the Certificate to the Commissioner of Income Tax within the jurisdictional area of the person along with the required documents;
• On-premise inspection is done by the Income Tax department after the form with the necessary documents are submitted;
• However, the Income Tax Officials might ask for additional records or evidence if they seem unfit, or if they feel anything is missing;
• After satisfactory verification of documents and the office of the NGO, an 80G certificate is granted to the Institution by the Commissioner;

The validity of an 80G Certificate is for a lifetime of the Institution.

What is the process for 12A Registration?

The process for registering 12A-

• The application is mandatory to be filed along with Form 10A and Rule 17A of the Income Tax Act, 1961, and submit it to the Commissioner of Income Tax.
• The next step is to submit the necessary documents for 12A Registration. The documents are-

o   List of trustees;
o   Address proof of trustees;
o   Pan of trustees;
o   Registration certificate;
o   MoA and AoA;
o   Pan of NGO.

•  Once the documents are submitted, the next stage is an inspection by a Tax Officer. During the investigation, Income Tax Department officials may ask for any additional materials.
• On successful verification and auditing of documents, 12A certification is granted by the Income Tax Commissioner.

Whom application for Registration under Section 12A has to be made? 

The submission of application for Registration has to be done with the Jurisdictional Principal Commissioner or Commissioner of Income Tax.

What are the circumstances for the Cancellation of Registration granted?

Registration granted as per Section 12A can be canceled in below circumstances:

•          If the activities of trust or Institution are not genuine.
•          If the activities are not carried out as per the objectives of the trust.
•        Trust income does not withstand for the benefit of the general public. 
•         The benefit to any particular religious community or caste. 
•          Any income of the trust is for the benefit of specified persons. 
•          Its funds are invested in forbidden modes.

“It is, however, said that registration would not be canceled if the trust proves that there was reasonable cause for carrying out activities.”

What are the Terms and Guidelines for NGOs associated with 12A Registration?

There are some terms and guidelines associated with Section 12A:

•        If NGOs are working for a particular community, then the NGO will be excluded from the tax exemption.
•          If the NGO or trust has its own business through which they have another income, then they are not eligible.
•          Cash donations accepted by the donors should be only  Rs 2,000.
•          Amounts beyond Rs 2000 should be done through electronic transfer.
•          The trusts and NGOs should maintain account books and receipts regularly; otherwise, they will be non-eligible for the exemption.
• The NGO should be registered under the Societies Registration Act,1860.

Conclusion

Section 12A registration helps NGOs to take exemption from paying taxes. Trust and organization which does not earn a profit are eligible under the act. Numerous documents are necessary to fill the form. Once the form is submitted, and the essential documents are verified, the Registration is applicable for a lifetime. Charitable trusts, along with people who donate their incomes up to 50%, can avail benefit under the Income Tax Act. In case of any query, contact Corpbiz.