12A & 80G Registration Online for NGOs in India

Non-profit organizations (NGOs) in India, including trusts, societies, and Section 8 companies, rely heavily on donations and grants to fulfill their charitable objectives. To encourage these contributions and to receive tax exemptions on their income, NGOs need to obtain registrations under Section 12A and Section 80G of the Income Tax Act, 1961. For any NGO in India, these two registrations are the bedrock of financial stability and fundraising success.

Section 12A of the Income Tax Act, 1961strong>

Section 12A registration grants income tax exemption to NGOs on their surplus income. Without this registration, any income generated by the NGO, including voluntary contributions (even from donations or grants), would be taxable as per standard rates. It essentially certifies that the organization's income is applied for charitable or religious purposes, and therefore, is exempt from tax.

Note: Since 2020, Section 12A has been replaced by Section 12AB. All NGOs must re-register under Section 12AB to continue enjoying their tax exemptions.

Section 80G of the Income Tax Act, 1961strong>

Section 80G registration, on the other hand, provides a tax benefit to the donors of the NGO. When an organization has an 80G certificate, individuals or entities donating to it can claim a deduction (either 50% or 100%, depending on the donee institution and type of donation) from their taxable income. This encourages more people to donate. However, this benefit has rules under Section 80G(1) of the Income Tax Act.

Differences Between 12A and 80G Registrationsstrong>

The key differences between 12A and 80G registration are outlined below:

Why do You Need Both 12A and 80G for Your NGO?strong>

While 12A registration grants tax exemption to the NGO, 80G registration is crucial for attracting donors. Many potential donors, especially individuals and corporations, look for 80 G-certified organizations to avail of tax benefits.

Securing both certificates significantly enhances your NGO's credibility and fundraising potential. Moreover, to be eligible for certain government grants and Corporate Social Responsibility (CSR) funds, possessing both 12A and 80G registrations is often a mandatory requirement.

Obtaining both 12A and 80G registrations offers several significant advantages for NGOs:

1. Complete Income Tax Exemptionstrong>

With 12A registration, an NGO's income, primarily derived from donations, grants, and other charitable activities, is exempt from income tax. This allows the organization to utilize a greater portion of its funds directly for its objectives.

2. More Donations and Building Truststrong>

The 80G certificate acts as a significant incentive for donors. Knowing they can receive a tax deduction (50-100%) for their contributions encourages more individuals and corporations to donate, leading to increased funding for the NGO. It also builds trust and credibility as it signifies government approval and adherence to regulatory standards.

3. Eligible for Government Grants and Official Fundingstrong>

Many government schemes (such as the Rashtriya Madhyamik Shiksha Abhiyan and the National Rural Livelihood Mission) and official funding opportunities require NGOs to be registered under both 12A and 80G. This shows the organization is legitimate and charitable.

4. Corporate Social Responsibility (CSR) Fundsstrong>

Corporations often allocate a portion of their profits toward CSR activities. Companies typically prefer to partner with NGOs that have 80G registration, as it allows them to claim tax benefits on their CSR contributions.

To qualify for 12A and 80G registration, an NGO must meet specific criteria.

Basic Eligibility for All NGOs (Trusts, Societies, and Section 8 Companies)strong>

• Charitable or Religious Purpose: The organization must be established for charitable or religious purposes as defined under Section 2(15) of the Income Tax Act. This includes relief of the poor, education, yoga, medical relief, preservation of the environment, preservation of monuments, and the advancement of any other object of general public utility.
• Non-Profit Motive: The organization must operate on a non-profit basis, meaning no part of its income or assets should directly or indirectly benefit its members, founders, or trustees.
• Proper Books of Accounts: The NGO must maintain regular and proper books of accounts and records of its receipts and expenses.
• Primarily Charitable Activities: While commercial activities are permitted, they must be incidental to the main charitable objects, and separate books of accounts must be maintained.
• Registration: The organization must be properly registered as a Trust, Society, or Section 8 Company under the relevant laws.
• No Benefit to Specific Community/Caste: The NGO should not be working for the benefit of any particular religious community or caste.

Specific Eligibility for a Public Charitable Truststrong>

• Registered under the Indian Trusts Act, 1882, or any other relevant state law.
• The trust deed must explicitly state the charitable objectives.

Specific Eligibility for a Registered Societystrong>

• Registered under the Societies Registration Act, 1860, or any other relevant state law.
• The Memorandum of Association (MoA) and Articles of Association (AoA) should clearly outline the charitable objectives.

Specific Eligibility for a Section 8 Companystrong>

• Registered under Section 8 of the Companies Act, 2013.
• Its objects must be for the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any other object.
• It must intend to apply its profits if any, or other income in promoting its objects.
• It must prohibit the payment of any dividend to its members.

The Finance Act of 2020 introduced significant changes to the registration process for NGOs:

• All new applications for 12A and 80G registration are now granted provisional registration for 3 years.
• The organization must apply for permanent registration:
  • Within six months before the provisional registration expires, or
  • Within six months after the commencement of its activities,
    whichever is earlier.

The permanent registration, once granted, is typically valid for five years, after which it needs to be renewed. For small trusts (with annual income up to Rs. 5 crore in the preceding two years), renewal may be granted for ten years after March 31, 2025.

Having all necessary documents ready is crucial for a smooth application process.

Documents for All Applicantsstrong>

• PAN Card of the NGO: A self-certified copy of the Permanent Account Number (PAN) card of the trust, society, or Section 8 company.
• Certificate of Registration/Incorporation:

• • For Trusts: Self-certified copy of the Trust Deed.
  • For Societies: Self-certified copy of the Registration Certificate, Memorandum of Association (MoA), and Bye-laws.
  • For Section 8 Companies: Self-certified copy of the Certificate of Incorporation, Memorandum of Association (MoA), and Articles of Association (AoA).

• Proof of Registered Office Address: Self-certified copies of utility bills (electricity bill, water bill), house tax receipt, or rent agreement if the office is rented, along with a No Objection Certificate (NOC) from the landlord.
• Financial Statements:

• • Audited financial statements (Income & Expenditure Account, Balance Sheet, Audit Report) for the last three years (or since inception if less than three years).
  • Bank statements for the last three years.

• Details of Welfare Activities: A brief note on the activities carried out by the organization since its inception or for the last three years, along with a progress report.
• List of Governing Body/Board of Trustees/Directors: A detailed list of members/trustees/directors with their names, addresses, contact details, and PAN copies.
• Details of Donors (if any): A list of donors along with their PAN details (especially for 80G applications if donations are received).
• Affidavit/Undertaking: An affidavit or undertaking by the head of the NGO confirming the genuineness of activities and compliance with legal provisions.
• Existing 12A/12AA/80G Certificates: Self-certified copy of any existing registration orders under Section 12A/12AA/12AB or 80G.
• FCRA Registration Certificate (if applicable): If the organization is registered under the Foreign Contribution (Regulation) Act, 2010.
• NITI Aayog Darpan Portal Registration Number: NGOs applying for 80G/12A registration are often required to provide their registration number with the DARPAN portal of NITI Aayog.

Specific Documents for Trusts:

• Original Trust Deed for verification (will be returned).

Specific Documents for Societies:

• Original Society Registration Certificate, MoA, and By-laws for verification (will be returned).

Specific Documents for Section 8 Companies:

• Original Certificate of Incorporation, MoA, and AoA for verification (will be returned).

The entire application process for 12A and 80G registration is online through the Income Tax Department's e-filing portal.

1. Preparation of Documents: Gather all necessary documents as per the checklist (detailed below).
2. Log in to E-filing Portal: Access the official Income Tax e-filing portal (incometax.gov.in).
3. Go to "Income Tax Forms": Select the appropriate 'Form Name' under the 'Persons Not Dependent on Any Source of Income' category, if applicable.
4. Select Form 10A (for Provisional/Existing Registration) or Form 10AB (for Conversion/Renewal): Choose the relevant assessment year.
5. Prepare and Submit Online: Select "Prepare and Submit Online" as the submission mode.
6. Fill in Details: Accurately complete all required information in the form, including details about the organization, its objectives, and activities.
7. Attach Documents: Upload self-attested scanned copies of all supporting documents.
8. Digital Signature/EVC: Submit the form using a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).
9. Acknowledgment: Upon successful submission, an acknowledgment receipt will be generated, which can be tracked under the ‘View Filed Forms’ section.
10. Scrutiny by the Income Tax Department: The Commissioner of Income Tax (Exemptions) will review the application and documents. They may request additional information or clarification.
11. Opportunity of Being Heard: In case of any discrepancies or potential rejection, the applicant will be given an opportunity to be heard.
12. Issuance of Certificate/Order: Upon satisfaction, the Commissioner will pass a written order granting the 12A and/or 80G certificate.

12A and 80G Application Forms and Their Timelinesstrong>

The application for 12A and 80G registrations, as well as their renewals, is done through specific forms with defined timelines:

*Subject to compliance with all conditions and approval by the Income Tax Department as per Section 12AB of the Income Tax Act, 1961.

Note: For NGOs with annual income up to Rs. 5 crores in each of the two preceding years, renewals granted after March 31, 2025, may last for 10 years instead of 5 years. However, this is subject to further clarity and specific orders from the Income Tax Department.

The costs associated with 12A and 80G registration can be broadly categorized as follows:

Government Feesstrong>

Currently, there are no direct government fees for filing applications for 12A and 80G registration (Form 10A or Form 10AB) on the Income Tax e-filing portal.

Professional Feesstrong>

Many NGOs engage professional consultants, Chartered Accountants (CAs), or legal firms to assist with the registration process due to its technical nature.

These professional fees can vary significantly based on:

• The complexity of the case.
• The professional's level of experience will impact the fees.
• Included services affect the cost, such as document preparation, online filing, and follow-up with the department.

Professional fees: Range from Rs. 8,000 to Rs. 30,000 or more.

Other Costsstrong>

• Digital Signature Certificate (DSC): Needed for online filing. The cost usually ranges from Rs. 500 to Rs. 2,000, depending on the type and provider.
• Notarizing Documents: Fees for notarizing trust deeds, MoAs, or other legal papers typically range from Rs. 50 to Rs. 500 per document, based on the notary and location.
• Courier Charges: If any physical documents need to be submitted or sent.

The renewal process for 12A and 80G registrations has become mandatory and is a critical compliance requirement.

Why is Renewal Mandatory Every 5 Years?strong>

The Finance Act of 2020 introduced an important change requiring all existing 12A and 80G registrations to be revalidated and renewed every five years. For eligible small trusts, this renewal period will extend to ten years starting after March 2025.

This change helps ensure that organizations stay compliant and that their charitable activities remain genuine and aligned with the provisions of the Income Tax Act.

Process for Renewalstrong>

The renewal process is similar to the provisional to regular conversion:

1. File Form 10AB: The renewal application must be filed online in Form 10AB on the Income Tax e-filing portal.
2. Submit Documents: All relevant documents, especially updated financial statements and activity reports, must be submitted.
3. Departmental Scrutiny: The Income Tax Department will review the application and may conduct inquiries to ensure the authenticity of activities and compliance.
4. Order of Renewal: Upon satisfaction, the renewal order will be issued, typically for another five years.

When to Apply for Renewal?strong>

For existing registrations revalidated under the new rules (with a 5-year validity starting April 1, 2021, or from the revalidation date). The renewal application (Form 10AB) must be filed at least six months before the current registration expires.

For example, if your 12A/80G registration (after revalidation) is valid until March 31, 2026 (Assessment Year 2026-27), then you must apply for renewal by September 30, 2025. It is highly recommended to start the preparation well in advance of this deadline.

Obtaining 12A and 80G registration is just the beginning. NGOs must adhere to ongoing compliance to maintain their tax-exempt status and the validity of their certificates.

1. Maintain Proper Books of Accounts and Records:

NGOs must meticulously maintain all financial records, including receipts, expenses, donation registers, and bank statements, according to accounting principles.

Note: Books must be maintained per the requirements of Section 11(4A) and Rule 17AA of the Income Tax Rules.

2. File Annual Income Tax Return (ITR) For NGOs:strong>

Every NGO registered under 12A, regardless of its income, is required to file an income tax return annually using the appropriate ITR form (typically ITR-7) by the prescribed due date. This return provides a comprehensive overview of the organization's financial activities and application of income.

3. Issue Donation Receipts and Form 10BE to Donors:strong>

For 80G donations, NGOs must issue donation receipts to their donors. These receipts should include details like the NGO's name, PAN, 80G registration number, donor's name, PAN, amount donated, and date.

Additionally, NGOs must furnish an annual statement of donations received in Form 10BD to the Income Tax Department and issue a certificate of donation in Form 10BE to each donor. This enables donors to claim their tax deductions.

4. File the Annual Statement of Donations (Form 10BD):strong>

All 80G-registered institutions must file Form 10BD electronically by May 31st of the year following the financial year in which the donation was received. This form details all donations received during the year.

Consequences for Non-Compliance of Section 12A & 80G of Income Taxstrong>

Failing to comply with the provisions of Sections 12A and 80G can lead to serious legal, financial, and operational setbacks for a charitable organization. Below are the key consequences of non-compliance:

• Late-filing fees & interest (Section 234F & 234A): The department levies up to Rs. 10,000 under Section 234F plus interest under Section 234A on overdue taxes.
• Disallow exemption (Section 12A(3)): The department disallows your 12A exemption and taxes your income at normal rates.
• Revocation of status (Section 12AA(3)): The Commissioner can revoke your 12AB/80G registration for fund misuse or repeated non-filing.
• Prosecution (Section 276C): Serious breaches may lead to prosecution, fines, or imprisonment for responsible office-bearers.

The application process can be complex. Here are some common reasons why applications might be rejected:

1. Incomplete or Incorrectly Filled Forms (Form 10A/10AB)strong>

Errors in filling out the online forms, missing mandatory information, or providing inconsistent data can lead to rejection. Moreover, starting April 1, 2021, all new registrations and re-registrations must be submitted using Form 10A for initial registration and Form 10AB for renewal or modification.

2. Mismatch in Documents and Objectivesstrong>

If the stated objectives in the application or organizational deed (Trust Deed/MoA/AoA) do not align with the definition of "charitable purposes" under the Income Tax Act, or if the activities carried out are not consistent with the stated objectives, the application may be rejected.

3. Poor Financial Record-Keepingstrong>

Lack of proper and audited financial statements, inconsistencies in accounts, or failure to demonstrate that income is being utilized solely for charitable purposes can be major grounds for rejection.

4. Failure to Meet Basic Eligibility (e.g., No PAN, Invalid Legal Structure)strong>

Failure to meet fundamental eligibility criteria, such as not being properly registered as a Trust, Society, or Section 8 Company, or operating for the benefit of a specific religious community or caste, will result in rejection. Also, not having a valid PAN for the NGO is a common oversight.

Once your NGO or charitable organization is registered under 12A and 80G with the Income Tax Department, you will receive official certificates for both. These certificates confirm that your organization is recognized as a tax-exempt charitable entity.

The 12A certificate provides income tax exemption on your organization’s earnings, while the 80G certificate allows donors to get tax deductions for donations made to your NGO. The certificates include details like your organization’s name, PAN, registration number, and registration date.

Having valid 12A and 80G certificates is important for:

• Getting an income tax exemption.
• Allowing donors to claim tax benefits.
• Applying for government grants and funding.
• Building trust with donors and authorities.
• Filing annual returns and staying compliant.

How to Download the 12A & 80G Registration Certificate?strong>

To download digital copies of your 12A and 80G certificates, follow these steps:

1. Visit the Income Tax Department e-Filing Portal at incometax.gov.in.
2. Log in with your registered user ID and password.
3. Go to the ‘e-File’ tab and select ‘Income Tax Forms’ or the section for registrations.
4. Find the option to view or download your 12A and 80G certificates linked to your PAN.
5. Download the certificates in PDF format.
6. Save the files securely and keep printed copies for your records.

These certificates are often needed during audits, grant applications, and compliance checks, so make sure to keep them easily accessible.