Organisations which are running for chartable or religious purpose are not liable to pay taxes on their income. Under income tax act, theses institutions can claim exemptions from tax by applying for tax exemption certificate (80G 12AA registration consultant). 80G Registration comes u/s 80G of Income Tax Act and provides benefits to the donor of organisation who donates money to NGO, whereas section 12AA Registration will assist an NGO to get an organization’s income exempted from Tax. To avail such exemptions organisation is required to file two separate applications for 80G & 12AA.
Any business organisation who is incorporated with the purpose of Non Profit Sharing Organisation can apply for registration under section 80G and 12AA. Generally Society, Trusts and Section 8 Company can apply for 80G & 12AA Registration. In other words an organisation incorporated with intent to charitable or religious object can apply for 80G & 12AA Registration. Point here to be noted that an Private limited cannot be apply for 80G & 12AA Registration.
- Income of Non Profit Organisation will be exempt from if certain conditions are met.
- Capital expenditure will be treated as expenses and can be claim as application of income.
- The person registered u/s 12A can avail benefits for accumulating or setting aside income which is not more than 15% for the charitable or religious purposes i.e. if income is not utilised as expense then such income can be kept in reserve for upto 15% of total income.
- A 12 registered NGO can easily receive grant from government and other approved organisation.
- A 12 registered NGO can also apply for 80G registration.
If an organisation obtained registration u/s 80G of Income Tax Act 1961, then Donor of such organisation can claim deduction from their taxable income. Registration u/s 80G provides benefit to donor as well as donee because whenever donor gets exemptions on account of donation which motivates donor to makes payment and such donation can be utilise for charitable and religious purpose
As per the provisions of income tax act, Charitable Trusts, Religious Trusts, Societies and Section 8 Companies can claim exemption under Section 11 and 12 of the Income Tax Act once they have registration u/s 12A. An online application has to be filed for obtaining registration. Following is the process for registration u/s 12A:
- Filing of form 10A online through login at income tax e-filling portal
- Digital Signature of Authorised Signatory will be required
- Review of application by Commissioner of Income Tax (Exemption) or CIT (E)
- Replying to queries raised by CIT (E)
- Approval of Registration application
- Registration Certificate obtained Under Trust Act, Society Act or Company Act
- Trust Deed, Society Deed or MOA of Section 8 Company
- Note on activities carried out by Non Profit Organisation
- All other documents required by CIT (E)
Registration obtained u/s 12A will be valid for 5 years from the date of issuance of certificate. You may contact us as 80G 12AA Registration Consultant.