80G and 12A Registration are essential registrations under the Indian Income Tax Act for Non-Governmental Organizations (NGOs), Charitable Trusts, and other nonprofit institutions in India. These registrations grant tax exemptions and provide benefits to both the organization and its donors. Here’s a breakdown of what each entails and how they benefit organizations and supporters:

1. Section 80G Registration

80G Registration is provided under Section 80G of the Income Tax Act, allowing donors to claim tax deductions on their donations. This deduction can be 50% or 100% of the donation amount, depending on the type of institution and the specific exemption provided by the Income Tax Department.

Key Benefits

• Tax Deduction for Donors: Donors receive tax deductions on their contributions to the organization, encouraging more donations.
• Increased Donor Trust: Organizations with 80G registration are more credible, as donors are assured of tax benefits.

Eligibility Criteria for 80G Registration

• The organization must be a charitable trust, society, or Section 8 company.
• The organization should not engage in activities that are non-charitable.
• All accounts should be audited, and the organization should follow the laws and regulations concerning donations and financial transparency.

Documents Required for 80G Registration

• Registration certificate and MOA/trust deed.
• No Objection Certificate (NOC) from the property owner where the organization operates.
• PAN of the organization.
• Financial statements (Balance sheet, income, and expense statements for the last three years).
• Activities and achievements of the NGO.

Application Process

1. Submission of Form 10G: The organization must submit Form 10G along with all required documents to the jurisdictional Commissioner of Income Tax (Exemptions).
2. Verification: After submission, the department may request additional documents and may visit the organization for further verification.
3. Approval: If satisfied, the department issues an 80G certificate, valid for 3-5 years, which can be renewed thereafter.

2. Section 12A Registration

12A Registration allows an organization to be recognized as a charitable institution, which exempts it from paying income tax on its surplus income. Organizations must obtain this registration to claim tax exemptions on income derived from voluntary contributions.

Key Benefits

• Tax Exemption on Income: Income is exempted from tax, reducing the financial burden and enabling more funds to be used for charitable activities.
• Increased Credibility: Registration enhances trust and transparency, facilitating funding from the government, donors, and international sources.

Eligibility Criteria for 12A Registration

• The organization must operate as a nonprofit, ensuring that income is used exclusively for charitable purposes.
• Must be a registered society, trust, or Section 8 company.
• Financial accounts must be maintained transparently.

Documents Required for 12A Registration

• Application in Form 10A.
• Copy of PAN Card of the organization.
• Certified copy of the trust deed, MOA, or rules and regulations of the organization.
• Financial statements for the last three years.
• Details of activities conducted by the organization.

Application Process

1. Form Submission: Submit Form 10A to the Commissioner of Income Tax (Exemptions) with supporting documents.
2. Inspection: The Commissioner may inspect and verify documents and operational authenticity.
3. Approval: Upon approval, a 12A registration certificate is granted. This certificate does not require renewal.

Compliance and Renewal

• 12A Registration is a one-time registration, while 80G Registration typically requires periodic renewal (every 3-5 years, based on current regulations).
• Organizations must maintain regular, audited accounts and submit annual returns to continue receiving benefits.

Conclusion

Registering under Sections 80G and 12A enhances credibility, improves funding opportunities, and provides critical tax benefits. This combination not only aids organizations in attracting more donations but also significantly lowers their tax liability, enabling them to allocate more resources to their charitable initiatives.