section 12a of income tax act

12a Registration is a certificate provided by the Income Tax department, which allows claim Income Tax exemption and many other benefits for your Trust, society or section 8 Company involved in the charitable activities recognize by the income tax department. When you declare your surplus in Income Tax return, tax is applied as flat 30% but if our trust, NGO or society have 12a registration online, tax on surplus can be exempted.

In this article, we have covered the benefits of 12A registration, documents required for 12A form registration and 12A registration online procedure.

Benefits of 12A Registration-

When you apply 12a registration online-

• NGO’s registered under 12A received grant from national and international sources. Having a 12A registration online increases the credibility of your NGO.
• Some entities provide grants only to those NGO’s, which is registered under 12A and having valid 12 a certificate
• Entities already registered under 12A will have to make a application of renewal under section 12AB of income tax act
• Income incurred for the purpose of charitable activities or religious purpose will be considered as application of income i.e. Expenditure incurred for the purpose of charitable activities or religious purpose will be allowed while computing income of the NGO.
• An exemption of 15% will be available on income.
• The accumulation of income, which is deemed as application of income as per section 11(2), shall not be included in the total income.
• To avail benefit in 80G registration, you have to make a separate application but 12A registration works as a supporting document and also helps in availing registration under 80G.
• Similarly, if your NGO is involved or planning to involve in receiving donation from abroad (foreign entities), then it have to obtain registration under FCRA too. 12A registration certificate also works as a supporting document and helps us in getting registration under FCRA.

Register your NGO Today.

Conditions for availing 12A Registration

• Finance Act, 2020 has unleashed certain new compliance burdens on Charitable Trusts and Exempt Institutions. As per new provisions of the Finance Act, 2020, Charitable Trusts and exempt institutions will have to reapply for Income Tax registration.
• All the existing charitable and religious institutions (including NGOs), which are registered or approved under the following sections-
• Section 12A
• Section 12AA
• Section 10(23C)
• Section 80G

are compulsorily required to switch to section 12AB of income tax act for fresh registration.

• All the existing NGO’s, which is registered in 12A will have to make a fresh application for renewal in section 12AB. This approval will remain valid for 5 years and NGO’s have to make Registration application again after 5 year for renewal.
• Registration granted under online 12A registration will remain valid for 5 year and NGO have to make fresh application for renewal for 12 a certificate.
• All the existing NGO, which is already registered under 12A have to make a fresh application under section 12AB for renewal of 12A registration. This application last date was 30^th June 2020 but now it has been extended to 31st December 2020.

You may also Like- Society Registration In India

12A Registration online procedure.

1. A duly complete application has to be filed to Principal commissioner of Income tax in form 10a income tax.
2. Documents required for 12 a registration required to be attached in form 10 a is explained below.
3. Principal commissioner of Income tax, on receipt of form 12A, (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about

(i) the genuineness of activities of the trust or institution; and

(ii) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects

and may also make such inquiries as he may deem necessary in this behalf

4.After satisfying himself about the objects of the trust or institution and the genuineness of its activities and compliance of the requirements he

(i) shall pass an order in writing registering the trust or institution u/s 12A of income tax act.

(ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution

and a copy of such order shall be sent to the applicant against form 12 a

Please note that no order shall be passed unless the applicant has been given a reasonable opportunity of being heard.

(It may be noted that you may have to visit to Principal commissioner of income tax in order to get registration under sec 12Aa of income tax act)

Documents required for 12A registration or 12Ab registration-

Following documents are required from the client and annexed to FORM 10A while registration: -

1. Registration Certificate and MOA / Trust Deed (two copies- self attested by the Managing Trustee)

2. NOC from the Landlord where registered office is situated (if place is rented)

3. Copy of PAN card of Trust/NGO.

4. Electricity Bill/ House Tax/ Water Bill or any other documents specifying ownership.

5. Evidence of welfare activities carried out and progress report of the same in the last 3 years or since inception.

6. Books of Accounts, Balance Sheet, ITR (if any) since inception or last 3 years.

7. List of Donors with their PAN and address and receipt issued.

8. List of Governing body or members of the trust/ Institution with complete address and contact details.

9. Trust Deed for verification of Original Registration Certificate and MOA.

10. Any other information / document as may be asked by the Income Tax Department.

In case of Violation of Conditions-

12A registration can be cancelled at any time if department has reason to believe that-

• NGO is involved in fraudulent activities.
• NGO is not maintaining the proper books of account.
• NGO is working only towards specific religion.
• Funds of NGO is invested in illegal activities.
• Income of NGO is being used for the benefit of a particular purpose.

12a registration fees

Fees for 12a registration varied from state to state. With Team Tax Advisory, you not only file your 12 registration under section 12aa of income tax act, but we will answer to principal commissioner of income tax in both ways, physical visit & online. Fees for filling application as online 12a registration for ngo is 24999/- rs only. for more assistance, you can contact at-8077361475.

For more related information, Contact TAX ADVISORY now!

By Arjun Mittal

Founder- Tax Advisory

"