In India, charitable organizations and nonprofit entities can avail themselves of significant tax benefits under the Income Tax Act by registering under Section 12A and Section 80G. These registrations provide certain advantages such as exemptions from tax on income and eligibility for donors to receive tax deductions on their contributions.

What is 12A and 80G Registration?

• 12A Registration:

1. Section 12A of the Income Tax Act deals with the registration of trusts, societies, and non-profit organizations that carry out charitable or religious activities. This registration allows organizations to avail tax exemptions on their income.
2. With 12A registration, a charitable organization is eligible to claim exemption from income tax on its income (if the income is used for charitable purposes).

• 80G Registration:

1. Section 80G of the Income Tax Act enables donors to claim tax deductions on their donations to eligible charitable organizations. This section is aimed at promoting philanthropy by providing donors with tax relief.
2. When an organization is registered under 80G, individuals or entities donating to the organization can claim deductions on their taxable income based on the amount they donate.

Importance of 12A and 80G Registration

• Through registration under 12A the organization can receive income tax exemptions that enables it to distribute funds in an optimal manner.

• The tax benefits that donors get through 80G motivate them to donate to charitable causes because they receive tax deductions from the government.

• An organization gains credibility and increases its donor base through multiple registration processes which results in higher success in attracting funding support from individual donors and corporate sponsors.

12A and 80G Registration Process

Both 12A and 80G registrations are achievable through the Income Tax Department e-filing portal. The following guide provides step-by-step details about 12A and 80G registration format:

• Eligibility Criteria : Organizations need to fulfill these conditions before submitting their 12A and 80G registration applications.

1. A charitable organization must possess objects of charity in order to qualify for 12A and 80G registration.

2. A non-profit structure defines the organization so that its revenue and excess funds cannot be directed to member advantage or personal use.

3. The organization needs a registered trust deed or society registration approved by relevant authorities.

• Prepare the Required Documents : To successfully apply for 12A and 80G registration, the organization needs to submit various documents. Common documents required include:

Documents Required for 12A and 80G Registration:

1. Copy of the trust deed or memorandum of association (MOA) or registration certificate of the society/trust.

2. PAN card of the organization.

3. Proof of address of the organization (e.g., electricity bill, lease agreement, etc.).

4. List of the board members and their details.

5. Financial statements of the organization (if applicable).

6. Copies of receipts and accounts showing the nature of the organization’s income and expenditure.

7. Registration with other authorities, if applicable, such as FCRA (Foreign Contribution Regulation Act) registration or state-specific charity registration.

8. Certificate of Incorporation or registration number with the relevant authorities.

9. Bank account details of the organization.

• Application on the Income Tax Portal

1. Login to the official Income Tax Department e-filing portal using the credentials of the organization.

2. Navigate to the “Charitable Trust” section and select “Application for Registration under Section 12A” (for 12A) and “Application for Registration under Section 80G” (for 80G).

3. Fill out the application forms accurately with all the required details about the organization.

4. Upload the necessary documents (as listed above) in the specified format.

5. Pay the applicable fees (if required) for the registration process.

6. After submission, the organization will receive an acknowledgment receipt.

• Review and Processing

1. After the submission of the online application, the Income Tax Department will review the application and the supporting documents. In some cases, the authorities may request additional information or clarification.
2. If everything is in order, the Income Tax Department will issue a 12A and 80G certificate for the organization.

• Issuance of Registration

1. Once the application is approved, the organization will receive the 12A and 80G registration certificates. The registration process usually takes around 2-3 months, depending on the complexity of the application and the verification process.

12A and 80G Registration Fees

The 12A and 80G registration fees are generally minimal, but they can vary depending on the nature of the application and the type of organization. Some key points to note:

• The registration fees for 12A and 80G can be paid online through the Income Tax portal.

• The fees are generally around ₹500 to ₹1,000 for both registrations, though they may vary from state to state.

• Additionally, professional fees (if you hire a consultant or CA) may also apply.

12A and 80G Registration Renewal

The 12A and 80G registrations are valid for a lifetime unless they are revoked by the Income Tax Department due to non-compliance or illegal activities. However, organizations are required to file annual returns with the Income Tax Department to keep their registration active.

Renewal of 12A and 80G Registration

• Renewal Process: There is no specific "renewal" process for 12A and 80G registrations. However, the organization must file annual income tax returns (Form ITR-7) regularly to maintain the validity of the registration.

• Non-compliance or failure to file returns could lead to the suspension or revocation of the 12A and 80G registration.

• Last Date for Filing Annual Returns: The deadline for filing returns for a financial year is July 31st (or the extended date, if applicable). The last date for submitting returns is subject to changes based on announcements by the Income Tax Department.

12A and 80G Registration Process in Hindi

The Income Tax Department official website provides 12A and 80G registration in both English and Hindi for organizations who want to apply in Hindi. The application contents including instructions are presented in both Hindi and English so applicants can use the language best suited to their needs.

Conclusion

An Indian charitable organization must register under 12A and 80G to access tax exemptions and enable donors to claim tax deductions from their donations. Organizations that get Section 12A registration obtain tax-free status and donors benefit from tax benefits through the Section 80G system.

The Income Tax Department allows organizations to complete 12A and 80G registration processes through its online portal in a simplified manner. Once charitable organizations obtain appropriate documentation together with required fees while maintaining Income Tax Act compliance they will receive these registrations and this enables them to expand their social impact.

The authors stand ready to help by answering any questions regarding 12A and 80G registration processes.

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