NGO can avail income tax exemption by getting itself registered and fulfilling certain other formalities, but such registration does not provide any benefit to the person making donations.
To provide income Tax benefits to the “donors”, all NGO’s must apply for 80G & 12A certification. If an NGO gets itself registered under section 80G & 12A then the person or the organization making a donation to the NGO will get a deduction of 50% of donation amount from taxable income.
An NGO is applicable for government funding only, if it is registered under 80G & 12A.
A newly registered NGO can also apply for 80G & 12AG registration.
NGO does not have to pay tax for the entire lifetime if it gets registered under section 80G & 12A.
An NGO can apply for 12A certification and 80G certifications just after the registration of an NGO.
Decision: - Is an 80G certification required for your NGO to attract more donors.
Attract Donors: - If an NGO gets itself registered under section 80G & 12A then the person or the organization making a donation to the NGO will get a deduction of 50% of donation amount from taxable income
Life time tax exemption: - NGO do not have to pay tax for the entire lifetime if it gets registered under section 12A
Government Funding: - An NGO is applicable for government funding, if it is registered under 80G & 12A
Borrowing Capital Benefits of 80G & 12A Certificate
It’s easy for an NGO to get funding if registered under 80G and 12A registration.
If registration for 80G certification benefits & Liabilities satisfy your business requirement, then registration for 80G certification might best suit your NGO needs.
Eligibility for 80G & 12A Certification
NGO income or assets should be exclusively for the purpose of charity.
Proper books of accounts of the NGO should be maintained, including all receipts and expenditures.
NGO should not be formed with the benefit of a particular religious, community or caste.
NGO should have core objective of charitable purposes, and whole income should be from donations. If in case, NGO has a business income then the trustee of the NGO should maintain separate books of accounts to ensure that NGO should not divert donations.
Corpseed Three Easy Steps to Apply for 80G & 12A Certification
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80G Certificate Overview
80G Certificate is issued to a non-profit organization or a charitable trust or non-governmental organizations (NGO), or a Section 8 Company by the Income Tax Department. The intention behind issuing the 80G certificate is to promote 50% tax benefits to donors so that more and more donors can donate funds to these organizations.
80G Registration Procedure
80G certificate application will be submitted to the Commissioner of Income Tax.
Once the applicant submits the form and the required documents for 80G registration, next step is on-the-premise inspection, which is to be completed by the Income Tax department. During inspection process, income tax department officials might ask for additional documents and evidence if required.
On successful verification and scrutinizing of documents and evidences, the 80G certificateis awarded to the institution by the income tax Commissioner.
80G Certificate is valid for a lifetime period.
12A Certificate Overview
NGOs are non-profit organizations that are meant for charitable and non-profit activities. However, they might generate income and would be required to pay income tax as per government norms, but if an NGO gets 12A certificate, then this certificate exempts NGO form income tax under section 12A of the Income Tax Act. The Section 12A of the IT Act, 1962 does not differentiate between charitable and religious Trusts. Hence 12A registration is valid to both the kinds of non-profit organizations.
12A Registration Procedure
The applicant needs to file application along with Form 10A, as per Rule 17A of the Income Tax Act, 1962, and submit it to the Commissioner of Income Tax.
Once the applicant submits the form 10 A along with required documents for 12A registration, next step is income tax officer inspection. During inspection process, income tax department officials might ask for additional documents and evidence if required
On successful verification and scrutinizing of documents and evidences, the 12A certificateis awarded to the institution by the income tax Commissioner.
12A Registration is valid for a lifetime period, unless NGO activities are against law.
Documents Required for 80G Certificate & 12A Registration
A copy of PAN Card (NGO).
Duly filled in Form – 10G.
Trust Deed / MOU .
Summary of welfare activities carried in the preceding 3 years.
Balance sheet and books of accounts for the preceding 3 years.
List of donors along with their address and PAN.
List of governing board of trustee’s members with their contact details.
Original Registration Certificate.
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