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12A & 80G CERTIFICATIONS
WHAT ARE 12A AND 80G CERTIFICATIONS?
The 12A and 80G are two Certificates given to charitable Non-Governmental Organizations (which include Trusts, Societies and Section 8 Companies) by the Income Tax Department of India.
Note: The 12A and 80G Certificates are also provided to Religious cum Charitable Organizations (where the total expenditure on Religious Activities does not exceed 5% of the total expenditure)
12A Certificate:
A 12A Certificate grants the charitable Non-Governmental Organization (Trusts, Societies & Section 8 Companies) an exemption from paying taxes on all the income it generates through any source (namely Donations, Income from sales, rental properties etc.)
80G Certificate:
The 80G Certificate grants power to the Non-Governmental Organization (Trusts, Societies & Section 8 Companies) to pass on some of the Tax Benefits to the Donor (an individual or institution making the donation) of the organization.
Note: Tax Benefits cannot be transferred to donors making anonymous donations and product and material donations.
CERTIFICATES PROVIDED TO CHARITABLE NGOS
WHY ARE 12A AND 80G CERTIFICATES PROVIDED TO CHARITABLE NGOS?
Though the process is completely online, extreme care should be taken while choosing the right Sub-Sections and details specific to the Organization for the successful completion of 12A & 80G Registrations.
Minor mismatches or discrepancies in the details during the Application process might lead to Rejection. Hence seeking Professional Guidance is mandatory for increasing the approval chances of your 12A & 80G Applications.
Taxkey had worked with 50+ NGOs and had successfully helped them in acquiring their 12A & 80G Certifications. Our team will guide you through the entire Application process for successful Registration.
Charitable Non-Governmental Organizations which include Trusts, Societies and Section 8 Companies help in the upliftment of society by choosing to work on their preferred target area (ex. Women Empowerment, Homeless Rehabilitation etc.).
Since the Government’s ultimate motive is to uplift every downtrodden and discriminated people, the work of these NGOs helps the Government to achieve those results. Hence the Government of India encourages more and more such organizations to serve society.
And as a token of appreciation, the Government grants them Tax Exemption benefits by issuing them the 12A and 80G Certificates. These Certificates eliminate the Tax Burden on these NGOs, enabling them to utilize those funds for furthering their cause.
WHICH NGOS CAN AVAIL?
WHICH NGOS CAN AVAIL OF THE 12A & 80G CERTIFICATIONS?
As mentioned earlier, all charitable NGO institutions are eligible to apply for 12A and 80G Certifications. But it is up to the Principal Commissioner of the Income Tax Department to approve or reject the applications for the 12A and 80G Certificates. The Principal Commissioner verifies the nature of the activities of these Charitable Organizations and, only upon his discretion, regarding the activities, issues the 12A and 80G Certifications.
All these approval criteria and rules are clearly mentioned in the recent (1st April 2021) amendment of Section 12AB to the Income Tax Act 1961.
VALIDITY OF THE 12A & 80G
WHAT IS THE VALIDITY OF THE 12A & 80G CERTIFICATES?
Before the Finance Act 2020, the Charitable NGOs, upon approval from the Principal Commissioner, received 12A and 80G Certificates with lifetime validity.
But the Finance Act 2020 revoked these rules and put forth new rules effective from 1st April 2021. The new rules stated that for New registration under Sections 12AB and 80G, provisional 12A and 80G Certifications were provided with a validity of 3 years. Upon renewing these Provisional 12A and 80G Registrations, they turn to Regular Registrations, which have a validity of 5 years.
From then on, every five years, the 12A and 80G Certifications have to be renewed.
FORMS USED FOR THE APPLICATION
WHERE SHOULD YOU APPLY FOR 12A & 80G CERTIFICATIONS?
Nature of the Application |
Type of Form |
Time Taken to process the Application (By the Principal Commissioner) |
|---|---|---|
|
NGOs applying for the Provisional 12A & 80G Registrations. |
Form 10A |
On or before 1 Month from the Date of Application |
|
NGOs applying for the upgradation of Provisional 12A & 80G Registrations to Regular Registrations |
Form 10AB |
On or before 6 Month from the Date of Application. |
|
NGOs applying for the Renewal of the Registration |
Form 10AB |
On or before 6 Month from the Date of Application. |
WHERE SHOULD YOU APPLY
WHERE SHOULD YOU APPLY FOR 12A & 80G CERTIFICATIONS?
The application for 12A and 80G (both Provisional & Regular) should be made in the respective E-Forms (As mentioned in the above Table) in the Indian Income Tax Portal.
Link to the Income Tax Portal: https://www.incometax.gov.in/iec/foportal/
DOCUMENTATION REQUIRED
DOCUMENTS REQUIRED FOR THE APPLICATION OF 12A & 80G CERTIFICATIONS.
For the successful application of 12A and 80G Certification the following documents are mandatory. Keeping these documents handy will result in a smooth application process
- PAN Card of the Organisation
- NGO’s Incorporation Certificate.
- Trust Deed (In case of Trusts) / Memorandum of Understanding (MOU) and Article of Association (AOA) (In case of Society/ Section 8 Company)
- Documentation of the NGO Welfare Activities.
- Financial Statements ( Income Statement, Cash Flow Statement, Balance Sheet)
- Registered Office Documentation (Ownership Document / Rental Agreement)
- Utility Bills of the Registered Office Premises (Electricity Bill / Telephone Bill/ Internet Bill/ Mobile Bill)
- Donor Details List (Address, PAN Details etc.)
- Details of the Members of the NGO (PAN Details, Contact Information, Designation etc.)
REGISTRATION FOR 12A & 80G
DOCUMENTS REQUIRED FOR THE APPLICATION OF 12A & 80G CERTIFICATIONS.
Both 12A & 80G Certifications are applied in the Indian Income Tax Portal using Form 10A for Provisional Registration and Form 10AB For Upgradation and Renewal of Registrations.
STEP 1: Visit the Income Tax Website of India (www.incometax.gov.in/iec/foportal/)
STEP 2: Login Using your respective Credentials (In case you don’t have an account, you can create one using their Register option)
STEP 3: Follow the steps given below to navigate to the Registration Panel
STEP 4: The “Tax Exemptions and Relief” Window will appear. Choose Form 10A or Form 10AB (Based on your requirement) from the list of Forms shown below and Click “File Now”.
STEP 5: Choose the Assessment Year and click Continue.
STEP 6: You will land in a page which constitutes 8 Sub-Sections namely,
- Incorporation / Constitution Details (Note: This section allows you to choose between 12A or 80G Application)
- Other Registration Details.
- Details of Key Person
- Details of Assets and Liabilities
- Income DetailS
- Religious Activities Details
- Verification
- Attachments
STEP 7: Fill the Individual Subsections corresponding to your NGO and save them
Note: Each subsection requires you to save them Individually during the Application Process which can be modified before the Final filing.
STEP 8: Submit the Application. You have successfully applied for 12A/80G Registration.
HOW CAN TAXKEY HELP
HOW CAN TAXKEY HELP WITH YOUR 12A & 80G REGISTRATION?
Though the process is completely online, extreme care should be taken while choosing the right Sub-Sections and details specific to the Organization for the successful completion of 12A & 80G Registrations.
Minor mismatches or discrepancies in the details during the Application process might lead to Rejection. Hence seeking Professional Guidance is mandatory for increasing the approval chances of your 12A & 80G Applications.
Taxkey had worked with 50+ NGOs and had successfully helped them in acquiring their 12A & 80G Certifications. Our team will guide you through the entire Application process for successful Registration.
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