Did you know that NGOs must apply for the 12A and 80G certificates to provide income tax exemption to donors? because it also assists non-governmental organizations in obtaining government funding. The 80G and 12A registration give fundamental associations that are intended for beneficent and non-benefit exercises only for NGOs.

What are 80G and 12A certificates?

The Income Tax Department issues an 80G Certificate to a non-governmental organization (NGO) such as a charitable trust or a Section 8 Company. The 80G Certificate is given to donors to encourage them to donate to such non-profit organizations.

When a donor donates to such an organization, they receive a 50% tax exemption because they become eligible to deduct such an amount from their Gross Total Income. To qualify for the exemption, the donor must also provide a stamped receipt for the donation. A receipt of this type must include the donor’s name, the date of donation, and the organization’s PAN.

Section 12A of the Income Tax Act of 1961 provides trusts, NGOs, and Section 8 companies with a one-time tax exemption. Organizations with a Section 12A registration are exempt from paying taxes on their surplus income.

Non-governmental organizations (NGOs) are organizations that engage in charitable and non-profit activities. They do, however, earn money and must pay taxes at regular rates if they don’t have 12A Certificates.

Why 80G and 12A Certificates?

Only NGOs and Charitable Organizations are eligible for 80G and 12A certificates if they meet the following criteria:

• They must not earn any money from a business.
• They should be a registered charity or a charitable trust.
• Furthermore, such organizations should not use their assets or income for any purpose other than charitable giving.
• In addition, they must keep a regular book of accounts for their receipts and expenses.
• The trustees or any other governing body of the organization should not benefit improperly from these funds.
• They should not work to benefit any particular caste or religion.
• In addition, for business-related income, the organization should keep a separate book of accounts.
• However, the NGO’s donations must not be used for such activities.

An NGO must apply for 12A and 80G registration as soon as it is formed.

Registration procedure for 80G certificate

• Apply for an 80G certificate to the Commissioner of Income Tax (Exemption) in the entity’s jurisdictional area, along with the necessary documents.
• The Income Tax department conducts an on-site inspection after the form and the required documents for 80G registration are submitted.
• However, if they appear unfit or if anything is missing, Income Tax Officials may request additional documents or evidence.
• The Commissioner issues an 80G certificate to the institution after verifying the documents and the office of the NGO.

Registration procedure for 12A certificate

• According to Rule 17A of the Income Tax Act of 1961, you must apply Form 10A.
• The application must be completed following the guidelines of the Jurisdictional Commissioner of Income Tax (Exemptions).
• After receiving the Form and the documents, the Commissioner verifies the authenticity of the organization’s activities. He can also request additional documents or information if he believes it is necessary.
• The Commissioner issues a written order granting 12A Registration based on the satisfactory report. If the Commissioner is not satisfied, he will reject the application, and the applicant will be given a fair hearing.

Documents required for 80G:

• MoA and registration certificate for Section 8 companies and Societies, and a Trust Deed for Trusts No objection certificate from the owner of the property where the Institution’s registered office is located
• Form 10G
• A copy of the NGO’s PAN Copy of Utility Bills, such as an electric bill, a water bill, or a house tax receipt
• A list of the donors, including their addresses and PAN
• Income Tax Returns and the Book of Accounts for the previous three years’ documents
• The list of current welfare activities, as well as a three-year progress report
• A comprehensive list of the Board of Trustees
• Original RC, Memorandum of Agreement, or Trust Deed.

Documents Required for 12A Registration:

• Documentary evidence of the Trust or NGO’s formation Trust Deed of a Trust
• Registration Certificate and Memorandum of Association MOA of a Society Section 8 companies must submit a certificate of incorporation as well as copies of the company’s MoA and AoA Form 10A.
• The Trust’s bank account statement for the last three years.
• The organization’s PAN.

The provisions of the 80G Certificate are governed by Section 80G of the Income Tax Act and provide benefits to an NGO’s donors, whereas 12A Registration enables an NGO to have its income tax-free. Both the 80G and 12A registrations are only available to non-profit and charitable organizations.