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80G & 12A
80G & 12A Registration
Are you somebody who runs a trust or intends to start one? Are you aware that the Income Tax Law provides you special rebates under sections 12A and 80G? Are you grabbing this opportunity, or you want to, but…don’t know how?
The government introduced certain provisions in the Finance Act, 2020, making it compulsory for charitable/religious/educational institutions/trusts to get themselves re-registered/re-approved or get provisional registration under the sections mentioned above. These provisions were made effective from 1st April, 2021.
If you’re a founder of an NGO or a big-hearted donor, then you must walk through this piece of information below, wherein you’ll be able to find all the answers you need for saving your monies and availing of the benefits offered by the Act.
What is section 12A?
Section 12A of the Income Tax Act, 1961 allows non-profit entities such as Charitable Trusts, Welfare Societies, Non-Profit Organizations, Religious Institutions, etc., to claim total tax exemption as per sections 11 and 12 of the Income Tax Law. It also helps get grants from governments or organizations abroad, thus having crucial significance in the world of charity.
What is section 80G?
Another significant benefit for charitable institutions is provided in section 80G, which allows their donors to deduct the sum paid as donations by them from their gross total income. This section raises the volume of assistance, and together, these sections provide substantial relief to both the trusts and their donors.
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What is the difference between sections 12A & 80G?
Section 12A offers tax exemptions to charitable institutions, whereas section 80G provides deductions to the donors of such funds regarding donations provided to such institutions by them.
What are the important changes that took place according to Finance Bill, 2020?
- A new section, i.e., section 12AB, replaced the existing section, 12AA.
- The procedure of registration and approval of NGOs has been made completely electronic.
- Under this new scheme, registration would be granted for a period of five years. Consequently, registration will have to be renewed every five years.
- Provisional registration would be granted for three years to the charitable institutions which are yet to begin their activities.
- NGOs registered prior to 1stApril, 2021 would be required to make an application again under the new scheme of registration.
What are the new forms introduced for charitable institutions?
The person who wishes to avail benefit as per sections 11 & 12 of the Act has to make the application in the prescribed Form, i.e., 10A or 10AB, to the Principal Commissioner to register the trust or the institution.
When to use Form 10A?
- Form 10A would be applicable in the following cases-
- 1: Already registered/approved trusts
- Application for revalidation of registration for existing charitable institutions/trusts registered/approved under section 12A/12AA/10(23C)/80G.
- 2: New Cases
- Application for obtaining provisional registration/approval under section 12AB/10(23C)/80G.
When to use Form 10AB?
- Form 10AB would be applicable in the following cases–
- 1: Conversion of provisional registration into regular registration.
- 2: Renewal of registration/approval after a period of five years.
- 3: Activating inoperative registration because of approval under section 10(23C)/10(46).
- 4: Re-registration for alteration of objects for entities registered u/s 12AB.
What details and documents are required for 80G & 12A registration online?
- 1: Income Tax portal login ID & password of the applicant
- 2: Copy of PAN card of the applicant
- 3: Contact details (mobile number and e-mail ID) of the applicant
- 4: Nature of activities carried out by the applicant
- 5: Copy of registration certificate of the applicant
- 6: Trust deed along with MOA of the applicant
- 7: List of objects or modified objects of the applicant, if any
- 8: The details of DARPAN registration, if the applicant is registered on DARPAN portal
- 9: The details of registration under FCRA (Foreign Contribution Regulation Act), if the applicant is registered under this Act
- 10: Details of settlor/trustee/members of the trust/charitable institution such as their PAN, Aadhar number, address, mobile number and e-mail ID
- 11: Financial statements since foundation/previous three years as the case may be
- 12: Self-certified copy of existing registration u/s 80G, if any
- 13: Self-certified copy of existing registration u/s 12A or 12AA or 12AB, as the case may be, if any
- The new process of registration under sections 12A and 80G can be broadly divided into three parts –
1: Re-registration
- Who all are liable for getting re-registered?
- All the institutions/trusts registered under section 12A or 12AA or holding approval under section 80G, 10(23C) or 35AC of the Income Tax Act, 1961, are liable for re-registration or re-approval to continue availing the benefits of the various section of the law.
- How to apply for re-registration?
- Form 10A has to be filed for obtaining re-registration. This Form can be filed using the e-filing portal of the Income Tax Department.
- What happens once you get yourself re-registered?
- Once the charitable institution gets itself re-registered, The Income Tax Department will allocate an electronically generated ‘Unique Registration Number(URN) to your trust/charitable institution and provide a certificate evidencing its registration.
- Till when will the registration be valid?
- The registration would be valid for five years.
- How to get oneself registered under section 80G?
- To continue availing of the benefits provided by section 80G, the charitable institutions need to make an application in form 10A separately. Hence, the same application has to be filed twice by the institutions for getting themselves registered under different sections.
- What is the due date for re-registration?
- The due date for re-registration or re-approval is 31stMarch, 2022.
2: Provisional Registration
- How to apply for registration for a new trust?
- Charitable Institutions or Trusts desiring new registration/approval under any of the above-mentioned sections, including section 80G, are also required to file their application through Form 10A. Such trusts or institutions will be provided provisional registration/approval for a period of three years.
- When to apply for fresh registration?
- The application for new registration has to be filed one month prior to the commencement of the previous year in which the charitable activities have to be started.
- What is the period of validity of Provisional Registration?
- The provisional registration/approval is granted for a period of three years.
- When will the order granting such registration be passed?
- The order granting provisional registration will be passed within one month from the end of the month in which such application is filed.
3: Renewal of Registration
- When to apply for renewal of registration?
- NGOs registered u/s 12AB or approved under section 80G, or section 10(23C) shall file a new application for renewal of registration within six months before the expiry of 5 years from registration of the NGO.
- What are the conditions for approving the renewal of registration?
- The Commissioner shall make inquiries to satisfy himself about the genuineness of activities and compliance with other laws. If he is satisfied, the approval shall be granted for five years.Otherwise, he shall pass an order rejecting the application for renewal of registration and revoking its existing registration.
- When will the order granting such registration or rejection be passed?
- Order granting such registration shall be passed within six months from the end of the month in which such application is made.
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