Understanding 80G and 12A Registration for NGOs in India

Non-governmental organizations (NGO’s) are organizations that play an important role in addressing a variety of social, environmental and educational issues. NGO’s seek funds from donors and grants from governments to effectively carry out their mission. The Government of India provides certain tax benefits to NGO’s to encourage donations, and the two major registrations that facilitate this are 80G and 12A. Let's find 80G and 12A  registrations for NGO include, their benefits and the process to obtain them.

What is 12A registration?

12A registration is a one-time registration which exempts NGO’s from paying income tax every year. This registration is done by NGO’s to establish their trust or to ensure that their money is used for charitable purposes.

Benefits of 12A Registration:

1. Income Tax Exemption: The primary benefits of 12A Registration is exemption from paying income tax on the surplus income generated by the NGO.
2. Eligibility for Government Funding: It is required for the NGO to get it registered under 12A for getting many government schemes and grants.
3. Enhanced Credibility: Credibility of the NGO among donors, stakeholders and government bodies increases if it has 12A registration.
4. Attracting donations: Most of donors like to contribute trusted and registered NGO’s. It is way and source of the trust of the donors.

What is 80G registration?

80G registration allows tax deduction on donations made by donors to non-government organizations. This registration is an important incentive for all individuals and organizations to donate, as it reduces their taxable income.

Benefits of 80G Registration:

1. 1. Tax deduction for donors: Highly effective benefits for the donor is that he can get benefit from a 50% tax relief on the donated amount, which he can then deduct from his Gross Total Income.
2. Increased donations: Tax benefits attract more donors, thereby increasing the funds available to NGO’s for their activities.
3. Enhanced Trust: those NGO’s who has 80G registration are perceived as more trustworthy and transparent, thereby enhancing their reputation among potential donors.
4. Competitive Advantage: NGO’s with 80G registration often have an edge over NGO’s without it when it comes to raising funds.

Main differences between 12A and 80G registration

1. Objective:

1.      12A Registration: it is beneficial for NGO’s because it Provides income tax exemption on NGO’s surplus income.

2.      80G Registration: it is beneficial for the donor because donor get tax deductions for contributions to NGO’s.

2. Beneficiaries:

1.      12A Registration: It is beneficial for NGO to reduced the tax liability.

2.      80G Registration: it is beneficial for theDonors benefit by reducing their taxable income.

Eligible Entities for Section 12A and 80G registration

Section 12A and 80G registration is available to different types of entities that meet the eligibility criteria. The following entities are eligible for Section 12A  and 80G registration under the Income Tax Act:

Trusts: Public charitable trusts, religious trusts and other types of trusts established for charitable or religious purposes can apply for registration under Section 12A and 80G.

Societies: Charitable or religious entities including educational institutions, hospitals, medical institutions and other similar establishments including societies registered under the Societies Registration Act 1860 are eligible for Section 12A and 80Gregistration.

NGOs (Non-Governmental Organisations): Non-profit organisations engaged in social welfare, community development, environmental protection or other charitable purposes can apply for registration under Section 12A.

Section 8 Companies: Companies registered under Section 8 of the Companies Act 2013, which are set up for promoting art, science, commerce, sports, education, research, social welfare or any other charitable purposes are eligible for Section 12A registration.

Documents Required for Registration under Section 12A and 80G of the Income Tax Act

The following documents are required to obtain 80G and 12A Registration:

• Certificate of Incorporation;
• MOA and AOA of the NGO if it is registered under Section 8
• By laws of the NGO if it is registered under Societies Act.
• Trust Deed, if the NGO is a trust;
• PAN card of the NGO;
• List of members of the board of trustees.
• Comprehensive list of welfare activities.
• Kyc of the Members

Conclusion:

For NGO’s in India, it is important for them to obtain the registration under section 80G and 12A of Income tax act. To enhance their credibility, attract donations and ensure financial sustainability. These registrations help to build the confidence among donors and stakeholders as well as provide benefits. By understanding the importance and process of these registrations, NGO’s can better navigate the regulatory landscape and focus on their mission of driving positive change in society. Also Read-

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