What Is 12A/80G?
Section 12 A of the Income Tax Act, 1961, is a onetime tax exemption provided to trusts, NGOs and Section 8 Companies. Organizations holding a registration under section 12A are exempted from paying taxes on their surplus income. NGOs are organizations involved in charitable and non-profit activities. However, they do earn income and they are required to pay tax as per normal rates if not registered under section 12A, Income Tax Act.
An 80G Certificate is issued by the Income Tax Department to a non-governmental organization (NGO) such as a charitable trust, 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 organization, as they become eligible to deduct such amount from their Gross Total Income. Additionally, in order to avail the exemption, the donor needs to attach the stamped receipt of the donation made. Such a receipt must contain the donor’s name, date of donation, and PAN of the organization.
Benefits of 12A/80G?
Obtaining 12A and 80G registration in India offers numerous benefits for nonprofit organizations and donors alike. Firstly, 12A registration grants tax exemption to the nonprofit, ensuring that their income is not subject to tax, freeing up more resources for their charitable activities. Secondly, 80G registration allows donors to claim tax deductions on their contributions to the nonprofit, incentivizing philanthropic giving. This benefit encourages individuals and corporations to support charitable causes financially. Furthermore, these registrations enhance the credibility and trustworthiness of the nonprofit, attracting more donors, partners, and volunteers. It also simplifies administrative processes and financial reporting, reducing compliance burdens. In essence, 12A and 80G registrations promote transparency, financial stability, and philanthropic giving, facilitating the nonprofit sector's crucial role in addressing social issues and making a positive impact on society.
Document Required
- Registration certificate and MoA in case of Section 8 companies and Societies; Trust Deed in case of a Trust.
- NOC from the owner of the property where the registered office of the Institution is located.
- PAN card copy of the NGO
- Copy of Utility Bills – Electricity bills, water bills or House Tax Receipt.
- Donor list along with their complete address and PAN
- Book of Accounts & Income Tax Return documents, of last three years.
- List of welfare activities being carried out & the progress report for last three years.
- Detailed list of the board of trustees.
- Deed for Verification – Original RC, MoA or Trust Deed.
- Mobile No & Email ID