12A Registration (NGO Registration)

Purpose: The primary purpose of 12A registration is to enable NGOs to avail tax exemptions on their income generated from charitable activities. This includes exemptions on donations, grants, and other sources of income used for charitable purposes.

Eligibility Criteria: NGOs engaged in charitable activities such as relief of the poor, education, medical relief, preservation of the environment, and advancement of any other object of general public utility are eligible to apply for 12A registration.

Application Process: NGOs seeking 12A registration must apply to the Commissioner of Income Tax (Exemptions) by submitting Form 10A along with necessary documents, including the organization's constitution, financial statements, details of activities, and objectives.

Assessment by Tax Authorities: The application for 12A registration is assessed by the tax authorities to ensure that the NGO meets the requirements stipulated under Section 12A of the Income Tax Act. This includes verifying the genuineness of the charitable activities and compliance with tax laws.

Issuance of Registration Certificate: If the tax authorities are satisfied with the NGO's eligibility and compliance, they issue a registration certificate under Section 12A. This certificate enables the NGO to avail tax exemptions on its income from charitable activities.

Validity and Renewal: The 12A registration is generally valid indefinitely unless revoked by the tax authorities. However, NGOs are required to comply with ongoing reporting and compliance requirements to maintain their registration status.

 Benefits of 12A Registration for NGOs:

Tax Exemptions: The primary benefit of 12A registration is the exemption of income tax on donations, grants, and other income derived from charitable activities, thereby allowing NGOs to allocate more resources to their social causes.

Attracting Donations: NGOs with 12A registration status are more attractive to donors, as donors can claim tax deductions under Section 80G of the Income Tax Act for donations made to registered NGOs.

Access to Funding: 12A registration enhances the credibility of NGOs, making them eligible to receive funding from various sources, including government grants, corporate social responsibility (CSR) funds, and philanthropic organizations.

Legal Recognition: 12A registration provides legal recognition to NGOs, validating their status as bona fide charitable organizations eligible for tax exemptions under the Income Tax Act.

Transparency and Accountability: NGOs registered under Section 12A are subject to greater scrutiny and accountability, as they are required to maintain transparent financial records and comply with reporting requirements.

In summary, 12A registration plays a crucial role in supporting the sustainability and impact of NGOs by providing tax exemptions on income derived from charitable activities, enhancing credibility, attracting donations, and facilitating access to funding opportunities. It ensures that NGOs can channel more resources towards their social welfare objectives and contribute effectively to community development and welfare initiatives.

• Tax Exemption: The primary scope of 12A registration is to avail tax exemption on income earned by NGOs from their charitable activities. This includes exemptions from income tax on donations, grants, and other sources of income used for charitable purposes.
• Eligibility for Government Grants: NGOs registered under Section 12A are eligible to receive grants and funding from government agencies, both at the central and state levels, for carrying out their charitable activities. Many government schemes and programs require NGOs to have 12A registration to qualify for funding.
• Enhanced Credibility: 12A registration enhances the credibility and trustworthiness of an NGO among donors, supporters, and beneficiaries. It provides assurance that the organization is compliant with tax laws and operates for genuine charitable purposes.
• Donor Attraction: Tax-exempt status encourages individuals and corporate entities to donate funds to NGOs, as donors can claim tax deductions under Section 80G of the Income Tax Act for donations made to registered NGOs.
• Compliance Requirements: NGOs registered under Section 12A are required to comply with certain regulatory requirements, such as maintaining proper books of accounts, submitting annual financial statements, and adhering to the provisions of the Income Tax Act.

• Covering Letter: A cover letter addressed to the Commissioner of Income Tax (Exemptions) requesting 12A registration for the NGO.

• Application Form (Form 10A): Duly filled and signed application form for registration under Section 12A of the Income Tax Act, 1961.

• Memorandum and Articles of Association (MOA and AOA):

  • Copies of the Memorandum of Association (MOA) and Articles of Association (AOA) of the NGO, which outline its objectives and governing rules.

• Trust Deed or Constitution: In case of a trust, a copy of the trust deed, and in case of a society, a copy of the society's constitution, establishing the legal framework and objectives of the NGO.

• Registration Certificate: Copy of the registration certificate of the NGO, issued by the relevant authority (e.g., Registrar of Trusts, Registrar of Societies, etc.).