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Registration for 12A 80G Certificate

Registration under 12A and 80G by a Non-Profit Organisation is attained for availing exemption under the Income Tax Act. A not for profit organisation needs these registrations for claiming exemption from applicability of Income Tax on the donations rece

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Introduction to 80G & 12A

Section 80 G

The Income Tax Department issues an 80 G certificate to a non-governmental organization (NGO), such as a charitable trust, or a Section 8 Company. The 80 G Certificate is given to allow donors to contribute money to non-profit organizations. In fact, by making contributions to such an entity, the donor earns a tax deduction of 50 percent because they are entitled to deduct this amount from their Gross Total Income. Additionally, the donor has to add the signed receipt of the donation made to take advantage of the exemption. Such a receipt will include the organization's name, donation date, and PAN.

Donation made to certain charitable institutions or to relief funds can be claimed as a deduction under section 80G of the income tax act. All types of contribution, however, is not eligible for deduction under this section. The only donation made to prescribed funds qualifies as a deduction.

Deduction under this section can be claimed by any taxpayer-individuals, company, firm, or any other person.

The deduction can only be claimed when the contribution has been made via cheque or a draft or in cash. The contribution made in-kind can’t be claimed as deduction under this section.

Section 12A

Section 12 A of the income tax act provides a tax exemption on income or amount received by a nonprofit organization. Once a trust/society/ section 8 companies get register in under section 12A of the income tax act can avail the exemption while filing its income tax return.

Section 12 A of the 1961 Income Tax Act includes a one-time tax exemption for trusts, NGOs, and Section 8 businesses. Organizations that hold a section 12A registration are excluded from paying tax on their surplus income. NGOs are charities and not-for-profit organizations. However, they earn income and, if not reported under section 12A, Income Tax Act, they are expected to pay tax according to regular rates.

It can be applied both together or it can also be applied separately. If a company is willing to file both applications separately, then the first file for registration u / s 12A. Getting 12A registration is required to apply for registration of Income Tax Act, 1961 u / s 80G.

Procedure for making registration under section 12A

➲ Make application 10A

On receipt of an application for the registration of a trust or institution, the Principal Commissioner or Commissioner shall

  1. request certain documentation or details from the trust or institution as he deems necessary to satisfy himself 
  • the authenticity of the activity of the trust or institution; and
  •  the compliance by the trustor institution of the provisions of any other law for the time being in effect for the purposes of fulfilling its purposes and may also make such inquiries as may be considered appropriate in that cases

➲ Granting of Certificate

After being satisfied with the objects of the trust or institution and the authenticity of its operations and compliance with the criteria, he passes a written order registering the trust or institution, If he can not be so satisfied, he shall pass an order in writing refusing to register the trust or entity and a copy of that order shall be sent to the applicant.

Please notice that no order shall be passed until a fair opportunity has been given to the applicant for hearing.

Once the registration certificate is issued under 12A then it will remain valid for a lifetime.

Documents required for 12A certification along with form 10A

➲ Copy of registration certificate of trust or NGO (Trust deed or registration certificate long with MOA in case of section 8 or society)

➲ PAN copy

➲ Three-year bank account statement

➲ Landowner NOC (were the organization is situated)

➲ Detail of governing bodies of the organization

➲ List of contributors along with PAN

➲ Detail of securities or shares or property purchased by or on behalf of the organization.

➲ Required declaration by authorized person.

➲ PAN and Adhar of trustees and members

➲ Trust deed/ MOA & AOA (in case of society or section 8)

Following condition must be fulfilled for getting registration under section 80G

 ➲ Organization must be registered under located in India for charitable purposes.

➲ Where the organization or fund receives any income, that income shall not be liable for inclusion in its total profits under the provisions of Sections 11and 12 or Section 10 section (23AA) or section (23C)

➲ If the entity or fund receives any income that is profits and business gains, the requirement that such income is not liable to be included in its overall income under the provisions of section 11 shall not apply in respect of such income if:

  1. The institution or fund shall maintain separate account books for such business;
  2.  contributions made to the institution or fund shall not be used directly or indirectly by the institution or fund for the purposes of such business;
  3. The company or fund issues a certificate to the individual making the donation to the effect that he keeps separate account books for that business and that the contributions he collects are not used, directly or indirectly, for the purposes of that business;

➲ The statute by which the organization is formed shall not include any provision for the transfer or application for any reason other than charitable purposes of the income or properties.

➲ The organization does not support any religious group or caste in particular.

➲ The institution should be either a Public Charitable Trust or a registered corporation or a corporation registered under the Companies Act'2013, or a law-established university, or any other educational institution recognized by the Government or a law-established university, or affiliated with any law-established university, or a fully or partially funded college or is an institution financed wholly or in part by the Government or local authority.

Procedure for registration under section 80G

As per rule 11A of income tax rules, 1962 following process must be followed for seeking registration under 80G:

➲ Any institution's request for approval shall be in the form no. 10 G verified by the person authorized to verify the return of income under section 140, as applicable to the assessee.

➲ Form No. 10 G shall be furnished electronically, —

  •  under digital signature, if the return of income is required to be furnished under digital signature, or 
  •  by electronic verification code in a case not protected by clause I

➲The Principal Director-General of Income-tax (Systems) or the Director-General of Income-tax (Systems), as the case may be, shall lay down the data structure, standards and procedure for the furnishing and verification of Form No. 10 G and shall be responsible for formulating and implementing effective security, archival and retrieval policies in relation to that form so furnished.

➲ Where the Principal Commissioner or Commissioner is satisfied that the applicant meets all the requirements set out in section 80G(5), he shall record such satisfaction in writing and grant approval in compliance with section 80 G of clause (vi) of subparagraph (5).

➲ Where the Principal Commissioner or Commissioner is satisfied that one or more of the conditions set out in section 80G(5) have not been met, he shall state the reasons in writing and deny the request for approval after giving the applicant an opportunity to be heard

Documents required for 80G certification along with form 10A

  1. Copy of registration certificate of trust or NGO (Trust deed or registration certificate long with MOA in case of section 8 or society)
  2. PAN copy
  3. Three-year bank account statement
  4. Landowner NOC (were the organization is situated)
  5. Detail of governing bodies of the organization
  6. List of contributors along with PAN
  7. Detail of securities or shares or property purchased by or on behalf of the organization.
  8. Required declaration by authorized person.
  9. PAN and Adhar of trustees and members
  10. Trust deed/ MOA & AOA (in case of society or section 8)
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