Introduction

The 12A Registration is granted by the Income Tax Authority to the Charitable Trust & Non-Profit Organization, the said registration is done for exempting tax. The Companies registered under Section 8 of the Companies Act 2013 such as Trust, Charitable Organization and Non-Profit Organization are covered under the scope of Section 8 of the Companies Act. The Income Tax Act has introduced various provisions related to the tax exemption for this type of incorporation such as Section 12A, 12AA & 80G of the said Act.

Benefits of 12A Registration

  1. Income received by the said organizations is tax free
  2. Person registered under 12A can accumulate or set aside the income, however the income which ought to be set aside should not be more than 15% of the Income received by the said institutions.
  3. The NGOs registered under 12A of the Income Tax Act will be eligible to grant funds from the Domestic & International sources.
  4. It is a one-time registration will be valid until cancellation
  5. No requirements to renew the registration periodically

 

Eligibility for registration under 12A

  1. The Applicant Institution should be covered under the scope of definition of charitable purpose which includes reliefs to the poor class, education, medical & activities for preserving the environment & any other activities related to public utilities.
  2. The Institution shall not work upon profit enhancing
  3. The Applicant institution should not be involved in trade practices
  4. The Applicant organization is not a Private or Family trusts

Documents required for Registration

  1. A self-certified copy of the instrument which was used to create the trust or establish the institution shall be submitted.
  2. The institution or trust may have been created otherwise than by way of drafting and registering an instrument. In such cases, a self-certified copy of the document evidencing the creation of the trust, or establishment of the institution should be submitted to the Income Tax Department.
  3. It is necessary to submit a self-certified copy of the registration, which was made with the applicable body. The applicable body may be the Registrar of Companies, the Registrar of Firms and Societies or Registrar of Public Trusts.
  4. A self-certified copy of the documents which provide evidence for adoption or modification of the objectives of the entity shall be submitted.
  5. Annual financial statements for three preceding financial years
  6. Note on the activities conducted by the entity
  7. In certain cases, the Income Tax department may cancel the registration granted under this section. After rectifying the default, the assessee is allowed to make a subsequent application. In such cases, it is necessary to submit a self-certified copy of the existing order granting registration.
  8. The assessee may have previously applied for registration under this section. The application may have been rejected. In such cases, a self-certified copy of the order of rejection should be attached with the application.

Procedure for Registration

Step 1: Login to Income Tax e-portal

Step 2: Select “Submit/Return” option from the navigation menu

Step 3: Log in to the account using ID & Password

Step 4: Select “e-file” then select “Income Tax Forms” from the drop menu

Step 5: Select Form 10A

Step 6: Select the relevant “Assessment & Submission” year

Step 7: Fill the required details

Step 8: Click on Submit

Step 9: After the submission is done the IT Commissioner will inspect the Application

Step 10: Submit the Additional details if required by the Commissioner

Step 11: After the Commissioner is satisfied the order for registration under 12A will be procured

Article by

Farhan Hashmi, Fresher, working as legla reserach intern at Corpzo

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