When it comes to charity and non-profit organizations, the government of India provides them with several benefits and exemptions. Among these, two of the most prominent ones are 80G and 12A registration. These registrations not only provide tax benefits to these organizations but also make them eligible for various government schemes and grants. In this blog, we will discuss in detail what these registrations are and what benefits they offer.
80G Registration:
80G is a provision under the Income Tax Act, 1961, which allows taxpayers to claim tax deductions on donations made to certain charitable institutions. This registration enables NGOs and other charitable organizations to receive tax-exempted donations from individuals and corporates. Any organization that meets the criteria set by the government can apply for 80G registration. The process for obtaining 80G registration involves the following steps:
- Registering the organization under Section 12A of the Income Tax Act: The organization must first apply for and obtain registration under Section 12A of the Income Tax Act to be eligible for 80G registration.
- Filing the 80G registration application: Once the organization is registered under Section 12A, it can apply for 80G registration by filing Form 10G with the Income Tax Department.
- Verification and approval: The Income Tax Department will verify the application and, if found to be in order, will approve the 80G registration.
Benefits of 80G Registration:
- Tax benefits for donors: Donations made to organizations registered under 80G are eligible for tax deductions. This encourages individuals and corporates to donate to charitable organizations.
- Increased credibility: 80G registration adds to the credibility of the organization as it is a recognized mark of trust and transparency.
- Eligibility for government grants: Organizations registered under 80G are eligible for various government schemes and grants.
- Increased donor base: 80G registration attracts a larger donor base as donors are assured of the legitimacy of the organization and the authenticity of their donations.
12A Registration:
Section 12A of the Income Tax Act, 1961, provides for the exemption of income of charitable or religious trusts or institutions, provided certain conditions are met. This section grants tax exemption to organizations that are established for charitable purposes. Any trust or NGO can apply for registration under Section 12A by following these steps:
- Registration of the trust: The trust must first be registered with the Registrar of Trusts or any other competent authority.
- Filing the 12A registration application: Once the trust is registered, it can apply for 12A registration by filing Form 10A with the Income Tax Department.
- Verification and approval: The Income Tax Department will verify the application and, if found to be in order, will approve the 12A registration.
Benefits of 12A Registration:
- Tax exemption: Organizations registered under Section 12A are exempted from paying income tax on their income.
- Eligibility for government grants: Organizations registered under Section 12A are eligible for various government schemes and grants.
- Increased credibility: 12A registration adds to the credibility of the organization as it is a recognized mark of trust and transparency.
- Legitimacy for receiving foreign funds: Foreign contributions can only be received by organizations that are registered under Section 12A.
Conclusion
Both 80G and 12A registrations are essential for NGOs and charitable organizations in India. These registrations not only provide tax benefits to donors but also make these organizations eligible for government schemes and grants. By obtaining these registrations, NGOs can increase their credibility and attract a larger donor base. However, it is important to note that these registrations come with certain obligations and compliances that must be adhered to by the organization
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Frequently Asked Questions (FAQs)
Q: What is 80G registration?
A: 80G registration is a certification granted to non-profit organizations that allows donors to claim tax deductions on the donations made to the organization. This registration is granted by the Income Tax Department of India.
Q: What is 12A registration?
A: 12A registration is a certification granted to non-profit organizations that allows them to be exempted from paying income tax on their income. This registration is granted by the Income Tax Department of India.
Q: What is the difference between 80G and 12A registrations?
A: 80G registration allows donors to claim tax deductions on their donations, while 12A registration exempts non-profit organizations from paying income tax on their income.
Q: Can a non-profit organization apply for both 80G and 12A registrations?
A: Yes, a non-profit organization can apply for both 80G and 12A registrations simultaneously.
Q: How long does it take to get 80G and 12A registrations?
A: The time taken to get 80G and 12A registrations can vary depending on various factors such as the completeness of the application, the workload of the Income Tax Department, etc. Generally, it takes around 3-6 months to get both registrations.
Q: Is it mandatory for a non-profit organization to have 80G and 12A registrations?
A: No, it is not mandatory for a non-profit organization to have 80G and 12A registrations. However, having these registrations can help the organization attract more donors and avail tax benefits.
Q: Can a non-profit organization apply for 80G and 12A registrations online?
A: Yes, non-profit organizations can apply for 80G and 12A registrations online through the Income Tax Department’s e-filing portal.
Q: Can a non-profit organization apply for 80G and 12A registrations after starting its operations?
A: Yes, a non-profit organization can apply for 80G and 12A registrations after starting its operations. However, it is recommended to apply for these registrations at the earliest to avoid any delay in availing tax benefits.
