80G & 12A Registrations
The not for profit organisation are organisations which are registered under income tax. 80G and 12A registration is something where these organisations can avail income tax exemption. These organisations are not for profit purpose and act as achieving common goal to meet their interest. This act is a beneficial form for the not profit organisation who are not working for profit but for betterment of society
Under this registration, the not for profit organisation must register themselves in order to have advantage of tax exemption. The registered NGO gets 12A certificate but this does not provide benefit to the person who makes donation.
- If the NGO is registered in 80G then the individual or the organisation making donations to NGO gets 50% deduction in all his taxable income
- If the NGO gets registered under 80G and 12A then the NGO is only applicable to have government funding
- If NGO is registered under 12A then the NGO does not have to pay any tax for the entire lifetime
80G registration documents:
- NGO must not have any income which is not exempted from tax
- The laws of NGO must not contain any rules and regulations which involve further investment or possession of income kept aside of charitable purpose
- NGO must maintain regular accounts of expenditure and receipt
- The NGO must be appropriately registered under societies registration act 1960
1. What are 12A and 80G registrations?
In order to avoid income tax liability, a NGO must get itself registered with the commissioner of Income tax (exemptions) under section 12A and 80G of Income tax act, 1961.
2. What is section 12A of Income Tax Act?
Income of an organization is exempted if NGO has 12A registration. All income shall not be taxable after 12A registration. This is one time registration.
3. What is section 80G of Income Tax Act?
If an organization has obtained certification under section 80G of Income Tax Act then donors of that NGO can claim exemption from Income Tax Act. This is not one time registration & needs to get renewed after validity period.
4. When an organization can apply for registration under section 12A and 80G of Income Tax Act?
Application for registration under section 12A and 80G can be applied just after registration of the NGO.
5. Where to apply for registration under section 12A and 80G of Income Tax Act?
Application for registration under section 12A and 80G can be applied to the Commissioner of Income Tax Act(exemption) having jurisdiction over the institution.
6. What applications forms are used for applying for registration under section 12A and 80G of Income Tax Act?
12A registration: Form 10A
80G registration: Form 10G (For new application and renewal both)
7. What is the procedure for 12A registration?
Steps to get 12A registration are:-
a. Place an order
b. Information check
c. Application filling
d. Getting registered
Compare your alternatives
Below is the comparison between Sole proprietorship, Partnership, Private Limited Company, Limited liability partnership, One person company and Public limited company
|Basis||Sole proprietorship||Partnership||LLP||Pvt Ltd.||OPC|
|Suggested For||Small manufacturers and traders||Family Businesses||Professional services firm||Start ups||Sole Promoters|
|Investment Friendly||Not Possible||Difficult||Difficult||Friendly||Difficult|
|Members Required||1 Director||2 Partners||2 Partners||2 Shareholders / Directors||1 Director and 1 nominee|
|Tax Benefits||Few tax benefits||Very few||Few tax benefits||Few tax benefits||Very few|
|Foreign ownership||Not allowed||Not allowed||Allowed with prior approval of RBI and FIPB approval||Allowed under the automatic approval||Director and nominee director cannot be members|
|Ownership Transferability||Not transferable||Not transferable||Can be transferred||Can be transferred by the way of share transfer||Can be transferred|