12A Registration
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12A Registration is a process that allows non-profit organizations such as NGOs, Trusts, and Societies to obtain tax exemption on their income. This registration is crucial for organizations that aim to operate for charitable purposes and seek financial sustainability. By obtaining 12A Registration, organizations can benefit from tax exemptions, eligibility for grants and donations, and enhanced credibility and trust among donors and stakeholders

12A Registration
12A certificate

Importance for NGOs, Trusts, and
Other Non-Profit Organizations

Tax Exemptions : Reduces tax liabilities, allowing more funds for charity.

Credibility & Trust : Enhances legitimacy with donors and government agencies.

Attracting Donations : Required for securing grants and corporate funding.

Encouraging Philanthropy : Donors get tax benefits under Section 80G.

Legal Recognition : Provides formal identity and regulatory protection.

Long-Term Sustainability : Ensures financial stability and resource access.

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12A Registration Application

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Steps for 12A Registration

12A Registration

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 Process of 12A Registration

STEP 1

  • Fill out the online form with your details.
  • Make the required payment to proceed.
  • Get Call for Further Information, Documents & Advice

STEP 2

  • Submit documents and information if requested.
  • Team will review and validate documents and information.

STEP 3

  • Creation of login credential.
  • Respond to any follow-up from the team.

STEP 4

  • Filing of an Application using the Credentials
  • Government Processing Time

STEP 5

  • Resolution of Queries if any, Raised via Authorities
  • Issuance of 12A Registration on email.

Brief overview of 12A Registration

12A Registration is a certification issued under the Income Tax Act, 1961, that provides tax exemption benefits to non-profit organizations such as NGOs, trusts, and societies. This certification allows these organizations to focus their financial resources on their philanthropic activities rather than on tax liabilities. It is a crucial step for orga 1izations aiming to operate legally, transparently, and effectively in India.

Organizations with 12A Registration can claim exemptions on surplus income, provided it is used exclusively for charitable or religious purposes. This certification not only aids in tax savings but also establishes the credibility of the organization in the eyes of donors, government bodies, and grant providers.

12A Overview

Benefits of 12A Registration

12A Registration offers significant advantages to non-profit organizations, including NGOs, Trusts, and Section 8 Companies, enhancing their operational efficiency and credibility.

Tax Exemption on Income

One of the most significant benefits of obtaining 12A Registration is the tax exemption on income earned by the organization. Non-profit organizations that receive 12A status are not required to pay income tax on the funds they raise, as long as these funds are used for charitable purposes. This allows organizations to reinvest more resources into their mission, enhancing their overall impact and reach.

Tax Exemption on Income
Eligibility for Grants and Donations

Eligibility for Grants and Donations

12A Registration is essential for non-profit organizations to qualify for various grants, funding opportunities, and donations. Many government programs, international donors, and philanthropic organizations require 12A status before providing financial support. Furthermore, donors who contribute to 12A-registered organizations can claim tax deductions under Section 80G, making it more attractive for them to contribute. This opens up numerous funding avenues, helping the organization secure financial resources for their activities.

Eligibility for Grants and Donations

Long-Term Sustainability and Credibility

Having 12A Registration establishes an organization as legitimate and credible, building trust with stakeholders, including donors, government bodies, and the public. This credibility helps attract long-term financial support, ensuring that the organization can continue its charitable work effectively. The recognition of being a registered entity also boosts transparency and accountability, fostering confidence in the organization’s operations. In the long run, this enhances the organization’s ability to operate sustainably and meet its goals.

Long-Term Sustainability and Credibility

Eligibility Criteria

To qualify for 12A Registration, organizations must meet certain criteria. The registration is designed for non-profit entities that operate for charitable purposes, and the eligibility requirements ensure that these organizations align with the legal definitions and objectives set forth by the Income Tax Act. Below are the key eligibility criteria for 12A Registration.

Types of Organizations Eligible

Trust:

A trust is a legal arrangement whereby one party (the trustee) holds property or assets for the benefit of another (the beneficiary). In India, trusts established for charitable purposes can apply for 12A registration.

Section 8 Companies:

These are non-profit companies registered under Section 8 of the Companies Act, 2013. These organizations must be established for charitable purposes and must not distribute profits to their members.

Society:

An association is an association of individuals formed to promote charitable activities. They are usually registered under the Societies Registration Act, 1860.

Non-profit Organizations Operating for Charitable Purposes:

Focus on activities that benefit the public, such as education, healthcare, and poverty relief. They reinvest any surplus funds into their mission rather than distributing profits.

Charitable Purposes as Defined by the
Income Tax Act

The Income Tax Act defines charitable purposes broadly. To qualify for 12A registration, an organisation must operate for one or more of the following charitable purposes:

● Relief of Poor
● Education
● Medical relief/assistance
● Advancement of any other generally useful thing

In addition, an organisation must not engage in any activity that is commercial in nature or involves the distribution of profits among its members. The organisation's main goal must be to benefit the general public, not just a particular group of individuals.

Charitable Purpose
12A Registration

Conditions for Eligibility

To qualify for 12A Registration, the organization must meet the following conditions:

● Non-Profit Motive: The organization must operate on a non-profit basis. This means it cannot distribute any profits or income to its members, directors, or founders.

● Public Benefit: The organization's activities should be for the public benefit and not for the private benefit of individuals or a specific group.

● Proper Documentation: The organization must provide the necessary documents, such as the trust deed, registration certificate, and financial statements, to prove that it meets the requirements of a charitable entity.

● Compliance with the Income Tax Act: The organization must comply with the provisions laid out by the Income Tax Act, including maintaining proper books of accounts and filing annual returns.

Application Process

Step-by-Step Guide to Applying [Stage-1]

1

Check Eligibility

Before you begin the application process, make sure your organisation meets the eligibility criteria for 12A registration.

2

Prepare Documents

Collect all the required documents (trust deed, PAN card, financial statements, etc) and ensure they are up to date.

3

Fill out the Application Form

Fill out Form 10A, which is available on the Income Tax Department’s e-filing portal. This form gathers information about your organization’s structure, objectives, and activities. It is the official application for 12A registration.

4

Upload Documents

Attach the required documents to the application form. Make sure the file is in the right format (PDF, JPG, etc.) and is readable.

5

Submitting the Application

Once you have filled up the form and uploaded the documents, submit your application through the Income Tax Department's online portal.

Online Application Process [Stage-2]

1

Login to the Income Tax Portal

Visit the legit Income Tax e-submitting portal and create an account or log in in case you have already got one.

2

Navigate to the 12A Registration Section

Find the “e-File” choice and choose the applicable phase for making use of 12A Registration (Form 10A).

3

Complete the Form

Fill in all required information about the organization, such as its charitable targets and activities.

4

Submit Form

After filling out the form, post it electronically via the portal.

Submission of Documents and Digital Signature Requirements

When submitting the documents, ensure the following:

1. Documents Upload

Attach scanned copies of the necessary documents (Trust Deed, PAN Card, Registration Certificate, Financial Statements, etc.). Ensure they are legible and clear.

2. Digital Signature

If submitting the form online, a digital signature is required to authenticate the application. This ensures the application is legally valid and approved.

3. Application Fee

Some applications may require a small processing fee. Check the guidelines on the portal for the specific details.

4. Confirmation

After submission, you will receive an acknowledgement receipt. Keep this for your records.

Renewal and Revocation of 12A Registration

Understanding the Validity of 12A Registration

12A Registration is typically valid indefinitely unless specific circumstances require renewal. However, recent amendments may necessitate periodic renewal, ensuring the organization's compliance with updated regulations. Staying informed about validity rules is essential to maintaining tax exemption benefits.

Common Reasons for Cancellation of 12A Registration

The Income Tax Department may revoke 12A Registration for reasons such as:
● Non-compliance with the Income Tax Act provisions.
● Misuse of funds or diversion to non-charitable purposes.
● Failure to file mandatory returns or maintain transparency in operations.
● Changes in the organization's objectives that no longer align with "charitable purposes."

Renewal Illustration

How to Renew or Reapply for 12A Registration After Cancellation

  • Gathering Necessary Documents:

    Updated trust deeds, audited financial statements, PAN cards, and activity reports.

  • Filing the Renewal Application:

    Submit Form 10A (or applicable form) via the Income Tax Department's portal.

  • Responding to Clarifications:

    Address queries raised by the Commissioner of Income Tax during the review process.

  • Ensuring Compliance:

    Rectify past discrepancies and adhere strictly to charitable purposes.

Procedure for Obtaining 12A Registration

Once you submit your application for 12A Registration, the process doesn’t end there. The Income Tax Department will review your submission, and there are several steps involved in obtaining approval. Below is a simplified breakdown of the procedure:

Review Process by the Commissioner of Income Tax

Once you submit your application, the Commissioner of Income Tax will verify the information provided:

  1. Verification of documents: The documents submitted such as trust deed, PAN card, financial statements etc. will be checked for compliance with the Income Tax Act.
  2. Assessment of charitable purposes: The authority will examine whether the organisation's activities comply with the definition of charitable purposes under the Income Tax Act.
  3. Possible explanations: If further information is required or there are discrepancies, the Commissioner may ask for clarification or supporting documents.
Review Illustration

Possible Outcomes of the Review Process

Outcome Illustration

Based on the review, the Commissioner may arrive at one of the following outcomes:

  1. Approval of 12A Registration: If all criteria are met, the organization will be granted 12A Registration, providing it with tax exemption and other benefits.
  2. Request for Additional Information: The Commissioner may request additional explanations or documentation if some aspects of the application are unclear.
  3. Rejection of the Application: Applications may be rejected due to non-compliance, insufficient documentation, or non-qualifying activities. Organizations can appeal such decisions or reapply after rectifying the issues.

Timeline for 12A Registration

The process typically takes 2–3 months from the date of application submission. However, the timeline can vary depending on:

  • The accuracy of the application and supporting documents.
  • Promptness in responding to queries or notices from the Income Tax Department.
  • Any delays in document verification or processing by the authorities.
Timeline Illustration

12A Registration FAQ's

What is 12A registration?
12A registration is a provision under the Income Tax Act, 1961, that grants non-profit organizations, such as NGOs, trusts, and societies, exemption from paying income tax on their surplus income.
It allows NGOs to be exempt from income tax, making them eligible to receive grants and funds from government and international agencies.
Non-profit entities like public charitable trusts, societies, and Section 8 companies engaged in charitable or religious activities are eligible.
An organization can apply immediately after its incorporation. It's advisable to apply as early as possible to avail tax benefits from the beginning.
Yes, applications for both 12A and 80G can be submitted together or separately. However, obtaining 12A registration is often a prerequisite for 80G approval.
Key documents include the organization's incorporation certificate, trust deed or memorandum of association, PAN card, financial statements, and details of activities.
The Income Tax Department does not charge any fee for 12A registration. However, professional fees may apply if you seek assistance from consultants.
The process typically takes 2 to 3 months, depending on the completeness of the application and the processing time of the Income Tax Department.
Previously, 12A registration was granted for a lifetime. However, as per recent amendments effective from April 1, 2021, registrations are now valid for five years and require renewal thereafter.
Failure to renew can lead to the loss of income tax exemptions, making the organization's income taxable.
Yes, the Income Tax Department can cancel the registration if the organization violates any laws or deviates from its charitable objectives.
Section 12A pertains to the conditions for applicability of tax exemptions, while 12AA outlines the procedure for registration. Post-2020 amendments, 12AA has been replaced by Section 12AB for new registrations.
No, to avail tax exemption under Section 11, the income must be applied for charitable purposes within India.
Yes, organizations must file annual income tax returns and maintain proper books of accounts to continue availing tax exemptions.
Any modification in objectives requires the organization to inform the Income Tax Department and may necessitate a fresh application for registration.