What is a 12A Certificate?

Section 12 A of the Income Tax Act, 1961, is a tax exemption provided to a non-governmental organization (NGO) such as a trust, society, or a Section 8 Company. Organizations holding a registration under section 12A are exempted from paying taxes on their surplus income.

What is an 80G Certificate and why it requires?

An 80G Certificate is issued by the Income Tax Department to a non-governmental organization (NGO) such as a charitable trust, society, or a Section 8 Company. The 80G Certificate is granted to encourage the donors to donate funds into such non- profit organizations.

Furthermore, the donor gets a tax exemption of 50% when they make donations to such an organization, as they become eligible to deduct such amount from their Gross Total Income.

Terms and Conditions:

• They must not have any income generated from a business.
• They should either be a charitable trust, a registered society or a section 8 company.
• Also, such organizations should not be using their assets or income for any other purpose other than making charity.
• Furthermore, they must maintain a regular book of accounts in favour of their receipts and expenses.
• The trustees or any other body governing the organization should not be involved in deriving any undue benefits from these funds.
• They should not be working for the benefit of any particular caste or religion.
• Also, in the case of business-related income, the organization should maintain a separate book of accounts. However, the donations received by the NGO must not be used for such businesses.

Benefits of 12A and 80G:

• The income received will be free from taxation
• An NGO can get tax exemption to pay tax.
• An NGO will receive Government Funding.
• The person or organization will get a deduction of 50% of the donation amount from the Taxable Income.

How it will be done?

For 12A certificate registration

• Validity period
• 5 Years validity of both certificate 12A & 80G.

For 80G certificate registration

• Validity period
• 5 Years validity of both certificate 12A & 80G.

Required documents for 12A & 80G registration:

• Registration Certification of the Trust/Society/Section 8 Company.
• Self-certified copy of Trust Deed/ Bye-laws/ MOA& AOA.
• Copy of the Pan Card of the Trust/ Society/Section 8 Company.
• List of the Trustees/governing body/members with address, email id and contact number.
• Copy of electricity bill/ water bill
• Evidence of welfare activities carried out.
• Progress Report since incorporation or last 3 years.
• Books of Accounts, Balance Sheet & ITR (if any), since incorporation or last 3 years.
• Bank statement of the last 6 months.
• NOC from the landlord where the registered office is situated.
• List of donors along with their address.
• Any other documents/ affidavit/ asked by the Income Tax Department.

Note 1: If require only 80G registration then 12A registration certificate is also mandatory.
Note 2: Arrange two sets of copies of all the mentioned documents.
Time involved for obtaining 12A & & 80G registration: 3 to 6 months
Note3: You may apply for both applications together or it can be also applied separately. If some organization is willing to apply both applications separately, then an application for registration u/s 12A will be applied first. Getting 12A registration must for applying application for registration u/s 80G of Income Tax Act.
Note4: As per Finance Act 2020, each NGO who had taken registration under section 12A or 80G or both sections of the income tax act, 1961 needs to re-obtain these registrations within 3 months starting from 01st June 2020.