12A & 80G Registration

12A registration grants income tax exemption to NGOs, trusts, and charitable organizations on their income used for charitable or religious purposes. 80G registration allows donors to claim tax deductions (50% or 100% of donation amount) from their taxable income, encouraging more donations to the organization.

Charitable trusts, societies registered under the Societies Registration Act, Section 8 companies, and religious institutions are eligible. The organization must not use funds for personal benefits of trustees, must maintain proper accounting records, and should not engage in religious or political activities for 80G eligibility.

Both 12A and 80G registrations are valid for 5 years and must be renewed before expiry. 12A registration is a one-time process unless there are changes in the organization's structure or activities. Renewal applications should be filed well before the expiry date to avoid loss of benefits.

The process involves filing Form 10A on the Income Tax Department portal, submitting trust deed or incorporation documents, financial statements, details of activities, and donor information for 80G. The application is reviewed by the Commissioner of Income Tax (Exemptions), who may request additional documents or clarifications before granting approval.

Yes, both registrations can be applied for simultaneously using the same Form 10A, though separate processing may occur. It is advisable to apply for both together to maximize tax benefits for the organization and its donors.

Without 12A registration, the NGO must pay income tax on its surplus income like any other business entity. This reduces funds available for charitable activities. Additionally, donors may be reluctant to contribute without 80G benefits, affecting fundraising capabilities.

Yes, organizations must maintain proper books of accounts, file annual income tax returns, ensure funds are used only for stated charitable purposes, maintain donor records for 80G, submit utilization certificates for grants, and comply with any conditions specified in the registration certificate.

Yes, the Income Tax Department can cancel registration if the organization misuses funds, fails to maintain accounts, engages in non-charitable activities, or violates any conditions of registration. Cancellation results in loss of tax exemption and donor tax benefits.

Foreign donors who have taxable income in India can claim deductions under 80G for donations to registered Indian NGOs. However, foreign contributions are primarily governed by FCRA regulations, and organizations must have FCRA registration to receive foreign funding legally.

12AB is the new provision introduced in the Finance Act, 2020, replacing the old 12A registration process. All existing 12A registrations had to be converted to 12AB by March 31, 2021. New applicants now apply under Section 12AB, which has stricter compliance and renewal requirements.