12A & 80G Registration under Income Tax Act: A Guide to Nonprofits

Committed Legal Assistance by AK Legal Mantra
We at AK Legal Mantra assist NGOs, trusts, societies, and Section 8 companies in getting essential 12A and 80G registrations under the Income Tax Act. These registrations are essential for tax exemption and to allow your donors to avail tax deduction, thus increasing your NGO’s credibility and ability to raise funds.

What are 12A and 80G Registrations?

12A Registration gives your organization tax exemption on donations and income generated from your charitable work. It is a compulsion for nonprofits to obtain tax exemption.

80G Registration enables your NGO donors to avail tax deduction against their donation, hence making donations to your cause more appealing. Not every NGO is automatically eligible for 80G status; that needs special approval.

Key Features of 12A and 80G Registration

1. 12A Registration

  • Grants income tax exemption to the NGO
  • Applies to income earned from donations, grants, and activities that further the NGO’s goals
  • Generally issued for the life of the NGO unless it is cancelled due to violations

2. 80G Registration

  • Allows donors to avail tax deduction under Section 80G of the Income Tax Act
  • Incentivizes more donations by providing tax relief to donors
  • Can be issued with or without a restriction on the percentage of donation that is eligible for deduction

Eligibility and Registration Process

  • The NGO has to be registered as a Trust, Society, or Section 8 Company
  • The organization should have a well-defined charitable or social welfare aim
  • Keep proper books of account and financial transparency
  • File an application along with audited accounts to the Income Tax Department

Why 12A and 80G Registrations are Important

  • Tax Exemption: Shields your NGO funds from income tax, ensuring maximum resources for your cause.
  • Improved Donations: 80G status encourages donors with tax relief, boosting fundraising efforts.
  • Credibility: These registrations show your NGO to be a legally compliant and transparent organization.

How AK Legal Mantra Can Assist

Our skilled professionals offer:

  • Help in preparing and filing 12A and 80G applications
  • Advice on document maintenance and audit compliance
  • Follow-up with tax authorities for easy and timely approval
  • Advisory services to ensure continuous compliance and renewals

With AK Legal Mantra, let your NGO leverage its legal advantages while concentrating on meaningful work.

FAQs

1. Is 12A registration compulsory for NGOs?
Although not required to function, 12A is necessary for tax exemption on income generated from charitable purposes.

2. Can an NGO obtain 80G without 12A registration?
No, 12A registration is a pre-requisite for the grant of 80G certification.

3. What is the time required for obtaining 12A and 80G approval?
It generally takes 3 to 6 months based on document completeness and Income Tax Department scrutiny.

4. Is 80G registration transferable or can be renewed?
Yes, 80G registration is issued for a specific period and must be renewed on completion of that period.

5. Does AK Legal Mantra assist in income tax audit and compliance after registration?
Yes, we provide regular audit and compliance services to maintain your NGO in good standing.