Are You Running or Planning to Start a Trust, Society, or NGO?

Did you know that the Income Tax Act offers special benefits for charitable activities under Sections 12A and 80G? If you want to leverage these provisions but are unsure how to proceed, we’re here to help.

The Finance Act, 2020 introduced mandatory registration and re-approval provisions for charitable, religious, and educational institutions under these sections. These changes, effective from April 1, 2021, aim to streamline and regulate the benefits offered to NGOs.

What is Section 12A?

Section 12A of the Income Tax Act, 1961, provides tax exemption for non-profit organizations like charitable trusts, welfare societies, religious institutions, and more. This exemption applies to income earned through charitable activities under Sections 11 and 12. It is also crucial for securing grants from foreign governments or organizations.

What is Section 80G?

Section 80G allows donors to deduct the amount of their donations from their gross total income. This incentivizes donations by providing tax relief to donors, thereby increasing financial support for charitable organizations.

Key Differences Between Sections 12A and 80G

Section 12A: Offers tax exemptions to charitable institutions.
Section 80G: Provides deductions to donors for their contributions to these institutions.

By understanding these distinctions, both NGOs and donors can maximize the benefits available to them.

Key Changes Introduced in the Finance Act, 2020

Section 12AA Replaced: Section 12AB was introduced for NGO registration.
Electronic Process: The registration and approval process became entirely digital.
Validity Period: Registrations are now granted for five years and must be renewed every five years.
Provisional Registration: Institutions that have not commenced activities can apply for provisional registration for three years.
Re-registration Requirement: NGOs registered before April 1, 2021, must re-register under the new scheme.

Forms Introduced for Registration

The new provisions introduced Forms 10A and 10AB for NGO registration:

Form 10A:
- For already registered trusts seeking revalidation of registration under sections 12A/12AA/10(23C)/80G.
- For new applicants seeking provisional registration under section 12AB.
Form 10AB:
- For converting provisional registration to regular registration.
- For renewing registration after five years.
- For re-registration due to changes in objects or other circumstances.

Documents Required for 12A & 80G Registration

To register under Sections 12A and 80G online, the following details and documents are necessary:

Income Tax portal login credentials.
PAN card copy of the trust or institution.
Registration certificate of the trust/institution.
Trust deed or Memorandum of Association (MOA).
List of activities conducted or planned by the organization.
Details of trustees/members, including their PAN, Aadhaar, address, and contact information.
Financial statements for the past three years (if applicable).
DARPAN portal registration details (if applicable).
FCRA registration details (if applicable).
Any previous registration certificates under Sections 80G or 12A.

Registration Categories

1. Re-registration

All trusts/institutions registered under Section 12A, 12AA, 80G, or 10(23C) must apply for re-registration to continue availing of tax benefits.

Application: Submit Form 10A through the Income Tax e-filing portal.
Outcome: The Income Tax Department will issue a Unique Registration Number (URN) valid for five years.

2. Provisional Registration

New applicants who have not commenced activities must apply for provisional registration via Form 10A.

Validity: Three years.
Timeline: Application must be submitted one month before the financial year in which activities are to commence.

3. Renewal of Registration

NGOs registered under Section 12AB or approved under Section 80G must renew their registration every five years.

Application: File Form 10AB six months before the registration’s expiry.
Process: The Commissioner will verify compliance and genuineness of activities before granting approval.

Frequently Asked Questions (FAQs)

Q1. Are all documents for Form 10A/10AB required to be self-certified?
Yes, all uploaded documents must be signed and stamped by the authorized person.

Q2. Can applications for Sections 12AB and 80G be filed together?
Yes, a single Form 10A can be used to apply for registration under both sections. However, separate applications must be submitted for each section.

Q3. Is a digital signature mandatory for filing Form 10A/10AB?
A digital signature is required only if the Return of Income is filed using a digital signature. Otherwise, an Electronic Verification Code (EVC) can be used.

Q4. Who verifies Form 10A/10AB?
The form is verified by the person authorized to verify the trust or institution’s income tax returns.

Q5. Can Section 12AB registration be canceled?
Yes, the registration can be canceled if the trust’s activities are found to be non-genuine or inconsistent with its stated objectives. However, the assessee will be given a fair hearing before cancellation.

How We Can Help

We provide end-to-end assistance for the registration, re-registration, and renewal of trusts and NGOs under Sections 12A and 80G. Our expert team ensures compliance with all regulations and smooth handling of the process.

Our services include:

Filing applications in Forms 10A/10AB.
Obtaining provisional or permanent registration.
Renewing existing registrations.