12A 80G Registration

Understanding 12A and 80G Registrations

If you're running an NGO, understanding 12A and 80G registrations is essential for both tax exemptions and attracting more donations.

What is 12A Registration?

12A registration is obtained under Section 12A of the Income Tax Act, 1961, and it allows NGOs to claim tax exemption on their earnings from grants, donations, and other unconditional contributions. Without 12A registration, an NGO's income would be subject to regular income tax. Any NGO that wants to enjoy this benefit must apply for 12A registration.

What is 80G Registration?

80G registration is specifically designed to benefit the donors of an NGO. Once an NGO is registered under 80G, its donors can claim tax deductions on their contributions, making it a strong incentive for people and businesses to donate. However, an NGO can only apply for 80G after obtaining 12A registration.

In short, 12A helps NGOs save on taxes, while 80G encourages more donations by offering tax benefits to donors.

Benefits of 12A and 80G Registration for NGOs

• 1. Tax Benefits for Donors - Donors to 80G-registered NGOs can claim tax deductions, encouraging more contributions.
• 2. Increased Credibility & Trust - 12A and 80G registrations enhance transparency, making NGOs more trustworthy for donors and institutions.
• 3. Higher Fundraising Potential - Tax incentives under 80G attract more donations, helping NGOs raise funds effectively.
• 4. Access to Government Grants - Many government funding programs require NGOs to have 12A and 80G registrations for eligibility.
• 5. Long-Term Financial Sustainability - Tax exemptions allow NGOs to allocate more funds to long-term projects and impact-driven initiatives.
• 6. Efficient Use of Resources - With tax-free donations, funds can be fully used for charitable and social welfare activities.

Eligibility Criteria for 80G Registration

• 1. Type of Organization - Only non-profit entities such as registered trusts, societies, and Section 8 companies can apply. The organization must operate for charitable or religious purposes that benefit the public, not just a specific group or private individuals.
• 2. Must Have 12A Registration - To qualify for 80G, an NGO must already have 12A registration, which grants tax exemption on income under Sections 11 and 12 of the Income Tax Act.
• 3. No Misuse of Funds - The NGO's constitution or governing documents must clearly state that its income and assets will only be used for charitable activities. Funds cannot be diverted for personal or non-charitable purposes.
• 4. Open to All Beneficiaries - An NGO cannot exclusively serve a particular religion or caste. It must work for the welfare of society as a whole rather than benefiting only a specific group.
• 5. Proper Financial Records - The organization must maintain proper accounting records to ensure transparency and compliance with tax laws. Regular financial statements are essential to track donations and expenditures.

Documents Required for 80G Registration

1. Trust/Institution Creation Document
   • If created under an instrument – Submit a self-certified copy of the trust deed or document.
   • If not created under an instrument – Provide a self-certified document confirming its formation.
2. Registration Certificate & Governing Documents
   • Self-certified Registration Certificate of the NGO.
   • MOA or Bye-laws (if applicable).
3. FCRA Registration (if applicable)
   • Copy of the FCRA Registration Certificate if the NGO receives foreign contributions.
4. Financial Records
   • Annual accounts for the last 3 years (if applicable).
   • Audit report of the previous year, prepared by a Chartered Accountant (if required).
5. NGO Darpan ID (if applicable)
   • Submit the NGO Darpan ID if registered on the portal.