About Taxation

Generally saying, Any NGO, which are engaged with socio-economic activities towards the needs of the general public at large and do not come under the ambit of the Income Tax Act, 1961. But NGOs not registered U/S.12A of the above Act then its total income and the corpus fund will be taxable.

Trust, Society and Section 8 Company can seek registration u/s 12A to claim exemption under provisions of Income Tax Act’1961, if certain conditions are satisfied. Section 12A deals with registration of trust and section 12AA deals with procedure for registration of trust.

12A Taxation

Its Mandatory : Section 11 and 12 of the income tax act provides discharge to NGO’s. Registration u/s 12A is a requirement and obligatory condition for claiming those exemptions. NGO’s having 12A registration have the advantage of tax benefits.

Benefits of Registering under 12A

  1. The NGO will enjoy tax exemption for the expenditure incurred for charitable or religious purpose.
  2. The NGOs which has got registered under Section 12A can take grant from various Government Schemes, Funding from Abroad etc.
  3. NGO’s get benefit in Foreign Contribution Regulation Act Registration
  4. It’s a Life time valid registration, there is no necessary for renewal.

Procedure for getting it registered

  1. Dully filled-in application to be submitted before the exemption Commissioner.
  2. NGO will receive notice for explanation from IT Department in 60-75 days.
  3. Reply notice to be submit to the IT Department through a proper Advocate specialised in NGO matters.
  4. If, called for, the Advocate will appear for the direct hearing
  5. Issue of 12A Certification

80G Taxation

Deduction under Section 80 g is available to any taxpayer (may be individual, company, firm or any other person) – Monetary Limits with respect to Donations made. There are few restrictions on the amount that is eligible for tax exemption which varies between 10% to 100%.

Not an Automatic Registration:

It is imperative to note that when the 12 A registration is granted, it doesn’t connote that section 80G grant is to be given. In other words the registration under the section 12A will not provide the automatic approval under the section 80G.

Proof of Payment for Deduction

It is mandatory that a proper proof of payment should be submitted at the time of submitting the IT Returns in order to get deduction. Further it is always advisable to make the donation by way of Cheque or DD or Bank Transfer. Cash payment is not advisable.

Where to Apply for Registration?

An application for the registration under the section 12A and 8OG can be submitted before the Commissioner of the Income-tax (Exemption). The Registration is valid for 1 to 3 years. We have to apply for the periodical renewal of 80G.

Documents that are required

To apply for this certificate, the following documents must be submitted:

Duly filled in Form 10G.
Copy of PAN card of NGO.
Past 3 Year Account Books
Evidence of Welfare Activities/Progress Report.
Registration Certificate along with MOA/Trust Deed.
Copy of Electricity Bill / NOC from building owner.

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