12A and 80G Registration of Charitable Institutions in India: A Step-by-Step Guide

Philanthropic organizations in India are tasked with the solution of various issues in society and furthering the development of communities. To favor such organizations, the government of India exempts tax under Sections 12A and 80G of the Income Tax Act, 1961. These registrations not only bring relief from financial pressures for institutions but also prompt donations by granting deductions while taxation is carried out.

Grasping 12A and 80G Registrations

• Registration under Section 12A: This registration denies income tax exemptions to non-charitable organizations against their excess earnings. With registration under 12A, NGOs can use all of their income in charitable activities free from the costs of taxation.
• Section 80G Registration: This registration enables donors to claim the amount of donations on their tax-paying incomes as charitable donations to registered NGOs. It acts as a motivating factor for individuals and companies to donate to social causes.

Advantages of 12A and 80G Registrations

• Tax Exemption for NGOs: By 12A registration, NGOs are exempted from income tax, allowing them to invest more resources into their goals.
• Attracting Donors: 80G registration increases the attractiveness of donations to would-be donors by providing tax deductions, thus expanding the possibilities of funding.
• Enhanced Credibility: Registered NGOs are considered to be more credible, and this can enhance the donor and government agency support.
• Grant Eligibility to Receive: The majority of grants of the government as well as overseas involve a condition where NGOs have to achieve 12A and 80G registrations.
• Operational Viability: Exemption from taxation and enhanced funds bring about sustained sustainability and growth in charitable bodies.

Eligibility Criteria

To be eligible for 12A and 80G registrations, an organization should:

• Be formed as a charitable trust, society, or a Section 8 company.
• Operate solely for charitable purposes.
• Make sure that no part of its income or assets shall be used for private benefit.
• Keep proper books of accounts and financial records.

Application Process

• Document preparation: Gather required documents, i.e., registration certificate, PAN card, trust deed or memorandum of association, and financial records.
• Filing Application: Submit Form 10A to register for 12A and Form 10G to register for 80G with the Income Tax Department.
• Verification: Additional information may be asked for or an inspection made to verify the genuineness of the organization.
• Approval: After successful verification, the department issues the respective registrations.

Validity and Renewal

Earlier, 12A and 80G registrations were issued for a lifetime. However, with recent changes, these registrations have now become five-year valid documents and need to be renewed accordingly. Organizations need to apply for renewal at least six months prior to the expiration of the existing registration.

Role of Goyal Natiya & Associates

It is sometimes difficult to deal with the intricacies of 12A and 80G registrations. Goyal Natiya & Associates, a Chartered Accountant firm formed in 2011, provides professional help in this area.

They provide the following services:

• Extensive counseling is required to know what the organization requires.
• Preparation and submission of application forms.
• Help in arranging the necessary documents.
• Liaising with the Income Tax Department to facilitate smooth processing.
• Advising on compliance and the renewal process.

Conclusion

12A and 80G registration is important for charitable organizations wanting to have greater impact. Beyond the financial returns, these certificates also give their credibility a boost and make donors more inclined. With the advice of professional bodies such as Goyal Natiya & Associates, NGOs need not struggle while registering and be able to better concentrate on delivering their purpose in serving society.