Check List and Procedure for Registration under Income Tax Section 12A in India

In India, Non-Governmental Organisations (NGOs) are of various types, such as Trust, Society, and Section 8 Company, which are registered under the Trust Act, Society Registrations Act, and the Companies Act in different states respectively.

The purpose of an NGO is to serve non-profit humanitarian purposes in the form of Trust, Society, and Section 8 Company. Once such a non-profit entity gets registered, it can avail of several tax benefits. Different kinds of tax exemptions, reliefs, tax deductions, and compensations are provided to the said entity and to the donors as well. To avail of these benefits, registrations under Section 12AA and 80G are compulsory. Otherwise, whatever the income an NGO earns through the sale of different goods or services, grants, and/or donations, will be treated as a normal taxable income, and this won’t consider the purpose of such income.

To get an exemption from income tax, an NGO should get itself registered under Section 12AA of the Income Tax Act. It is to be noted that registration under Section 80G of the Income Tax Act provides tax benefits to the donors of an NGO.

12AA REGISTRATION:

Generally, most Trusts get itself registered under Section 12AA of the Income Tax Act to be exempted from paying income tax right after the incorporation. This is a one-time exemption obtained by them. The benefit of income tax exemption is applicable for all non-profit entities. Section 12AA registration is not applicable for Private or Family Trusts. Charitable trusts, religious trusts, companies, etc., which come under Section 8 of the Company Act, 2013 these are eligible for 12AA Registration. 

DOCUMENTS REQUIRED FOR 12AA REGISTRATION:

For a 12AA registration, an applicant needs to submit the following documents in Form 10A-

1. The first and foremost document for 12AA registration is Form 10A,

2. Certified copy of the instrument under which the trust or Institution was created,

3. Certified copy of the document which shows proof of the creation of the trust or the establishment of the Institution,

4. PAN of the organization,

5. Certified copy of Registration with RoC/Registrar of Firms & Societies/Registrar of Trusts,

6. Certified copy of the documents which shows proof of adoption or modification of the objects, 

7. Certified copy of the annual reports of the trust or Institution for a maximum of three immediately preceding financial years,

8. Three-year bank account statement of the said trust or Institution,

9. Certified copy of existing order which grants Registration under Section 12AA or Section 12AA,

10. Certified copy of the order of rejection of application for grant of Registration under Section 12AA or Section 12AA.

PROCEDURE TO OBTAIN REGISTRATION UNDER SECTION 12AA:

a.   The applicant is required to submit the application in the required format online. Once the application has been submitted, the Commissioner may request the applicant to submit additional information or documents, if needed. The Commissioner may make such a request in order to satisfy the Income Tax Depart. about the genuineness of the activity(ies) undertaken by the trust.

b.  Once the Commissioner gets satisfied with the application, he will pass such written order mentioning that the Assessee is eligible and shall be provided Registration under the said Act. The written order is forwarded to the Assessee. After receiving the receipt of the order, the Assessee is entitled to obtain the privilege of Registration under the said section.

c.   When the Commissioner is not satisfied with the application, in that case, he has the right to reject the application straight away. The Assessee will be informed in writing of the reason for the rejection of his application.

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