After sharing the 2 valuable articles, “Section 80G of IT Act- how to get tax benefit under Income Tax” and “80G deduction limit- How to calculate deduction limit for 80G of IT Act“. Now we are discussing the procedure for registration u/s 12A, and 80G.
Who is required to get registered u/s 12A, and 80G
Registration u/s 12A- Trust, society, and section 8 companies can seek registration u/s 12A to claim an exemption under the Income Tax Act.
Registration u/s 80G- Under section 80G trust or institution can seek registration and it does not apply to religious trusts or institutions. Whereas the scheme of exemption u/s 12A applies to both charitable as well as religious trusts.
Eligibility of section 12A and 80G registration
As mentioned above religious trust or institution can not seek registration u/s 80G and if they apply, registration u/s 80G is not typically granted to them. Except for this, the following are the eligibility to get registration u/s 12A and 80G.
Section 12A- Eligibility
Following trust or institution are eligible to get registered u/s 12A
Charitable Trust, Religious Trust, Society, and section 8 company that has been formed to provide benefit to the public.
Private or family trusts are not eligible to get registered itself u/s 12A.
Section 80G- Know how to get tax benefit under Income Tax
Section 80G- Eligibility
Not all NGOs or trusts are eligible for 80G certification. There are certain rules which need to be followed to obtain it. Here are some details under which the government can reject your claim for registration or say certificate u/s 80G.
1. Separation of Business & Charity:- As a non-profit organization, if the entity is involved in any business/financial transactions which do not account for donations alone, you might have to segregate it. If not, your 80G certification request will be rejected.
2. No Misuse: The donations received so far, towards the cause should not be misused on any account or used for any other purpose, even within the organization. A strict accounting is essential to show as proof.
3. No Religious Activity: Any NGO/Trust, which is operated as a part of an activity that involves religious preaching, or for a particular caste or creed is not eligible for 80G certification.
4. Proper Accounting: As mentioned earlier, the accounting books and all transactions should be kept as proof before applying for 80G. These documents will be scrutinized thoroughly before 80G certification is issued.
80G deduction limit- How to calculate deduction limit for 80G of IT Act
Documents required for registration u/s 80G and 12A
Documents Required for 12A registration
To get the registration u/s 12A, the organization needs to submit Form 10A. This form needs to submit to the jurisdictional Principal Commissioner or Commissioner of Income Tax (exemption). Following documents to be submitted along with Form 10A-
General Documents- A copy of PAN Card, List of trustee members with their contact details, any utility bill of trust registered office, etc.
Trust Deed- Copy of Trust Deed or Instrument, where the trust is created under an instrument.
Other than Trust Deed- Copy of the document evidencing the creation of the trust, where the trust is created, otherwise than under an instrument.
Registration Copy- Copy of registration with Registrar of Companies (RoC) or Registrar of Firms and Societies or Registrar of Public Trusts.
Object Clause- Copy of the documents evidencing adoption or modification of the objects, if any;
Annual Accounts- Where the trust has been in existence during any year or years prior to the financial year in which the application for registration is made, self-certified copies of the annual accounts of the trust relating to such prior year or years (but not more than 3 years immediately preceding the year).
The activity of Trust- Note on the activities of the trust or institution.
Existing Registration Order- Copy of the existing order granting registration under section 12A or section 12AA, if any.
Rejected Registration Order- Certified copy of the order of rejection of an application for grant of registration under section 12A or section 12AA, if any.
Note:- All the above documents need to be self-certified.
Documents Required for registration u/s 80G
To get registered u/s 80G, the organization needs to submit Form 10G to the Jurisdictional Principal Commissioner or Commissioner of Income Tax (exemption) along with the following documents-
- Registration Certificate and MOA/Trust Deed,
- No Objection Certificate (NOC) from the Landlord (where the registered office is situated),
- Copy of PAN card of the NGO,
- Address Proof, as in the copy of Electricity Bill/House tax Receipt/Water Bill,
- Proof of the welfare activities carried out & Progress Report since incorporation or else, last 3 years,
- List of governing body board of trustees members with their contact details
- The Statement of Accounts, Balance Sheet, Income Tax Return documents since incorporation or else, last 3 years,
- List and details of donors, such as their address and PAN,
- Copy of Registration u/s 12A or copy of notification issued under section 10(23)or section 10(23C).
Certificate u/s 80G and 12A
Scrutiny of Documents- On receipts of the application, The Principal Commissioner or Commissioner of Income Tax will scrutinize the form 10A/G and other documents submitted by the applicant. He may ask for some additional documents or any information.
Pass Order- After complete scrutiny, he may pass an order in writing registering the applicant under section 12A or 80G (as the case may be) of the Income Tax Act. If not, he may reject the application. On approval, he will issue certificate u/s 12A and/or certificate u/s 80G (as the case may be)
Time Limit- The time limit by which The Principal Commissioner or Commissioner of Income Tax has to pass an order, of either approval or rejection, shall not exceed 6 months from the end of the month in which such application was made.
Some important points relating to section 80G, 12A and 12AA
Difference between section 12A and 12AA- Both the section is related to registration of Trust, the main difference between both is that section 12A deals with registration of trust and section 12AA is deal with the procedure for registration of a trust.
Also Read- GST Registration Full Guide
Which Registration should be first u/s 80G and 12A- The application for registration u/s 12A and 80G can be applied together or they can be applied separately.
If trust is willing to apply both the registration separately, then the application for registration u/s 12A has to been applied first as the registration u/s is a must for applying for registration u/s 80G of the Income Tax Act.
Automatic Registration/Approval- It may please be noted that when registration is granted u/s 12A, it does not mean that section 80G approval has been given, It means that registration u/s 12A will not provide automatic approval u/s 80G. It has to be applied separately.
One-time Registration- Section 12A is also provided that, once the registration is granted, it will hold well till the cancellation of registration.
Online apply for 12A and 80G
Now the question is can we apply online for 12A and 80G registration. The answer to this question is ‘yes.
80G Registration online- As we discussed above for 80G registration, form 10G with supporting documents need to be submitted to the Jurisdictional Principal Commissioner or Commissioner of Income Tax (exemption) and for 80G registration online all the same documents need to be submitted through the Income Tax Portal. The applicant needs to submit these documents by login in or registering at the portal.
12A Registration online- As per notification no. 10/2018-Income Tax issued by the CBDT as of 19.02.2018 charitable or religious trust or institution can apply for registration under section 12A. Along with form 10A, all the supporting documents need to be submitted through Income Tax Portal.
Frequently Asked Questions- FAQs
What is 12A and 80G?
under section 80G trust or institution can seek registration and it does not apply to religious trusts or institutions. Whereas the scheme of exemption u/s 12A applies to both charitable as well as religious trusts.
What is 12A and 80G Certificate?
After complete scrutiny, the Principal Commissioner or Commissioner of Income Tax may pass an order in writing registering the applicant under section 12A or 80G (as the case may be) of the Income Tax Act. If not, he may reject the application. On approval, he will issue certificate u/s 12A and/or certificate u/s 80G (as the case may be)
What is 12A Exemption?
Trust, society, and section 8 companies can seek registration u/s 12A to claim an exemption under the Income Tax Act and the scheme of exemption u/s 12A applies to both charitable as well as religious trusts.
What is the difference between 12A and 12AA?
Both the section is related to registration of Trust, the main difference between both is that section 12A deals with registration of trust and section 12AA is deal with the procedure for registration of a trust.
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Disclaimer: The information contained in the above article are solely for informational purpose after exercising due care. However, it does not constitute professional advice or a formal recommendation. The author does not own any responsibility for any loss or damage caused to any person, directly or indirectly, for any action taken on the basis of the above article.
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Compiled by- CA Chirag Agarwal (Practicing Chartered Accountants)