Non-Governmental Organizations (NGOs) play a vital role in addressing social issues and providing assistance to communities in need. However, sustaining their operations often requires financial support. To encourage donations and support from individuals and corporations, the Indian government offers tax benefits through provisions like Section 12A and Section 80G of the Income Tax Act, 1961. These registrations provide incentives to donors while promoting transparency and accountability within the NGO sector.

Section 12A Registration

Eligibility Criteria for 12A Registration: To qualify for 12A registration, an NGO must meet specific eligibility criteria:

1. Legal Structure: The NGO should be constituted as a charitable trust, society, or a company registered under Section 8 of the Companies Act, 2013.
2. Charitable Purpose: Its primary objective should be charitable or religious, and it must spend at least 85% of its income towards such activities.
3. Non-Profit Motive: The NGO should not engage in any activity that generates profits for its members, directors, or trustees.

Procedure for Obtaining 12A Registration

The process for obtaining 12A registration involves the following steps:

1. Application Submission: The NGO must apply for registration in Form 10A to the Commissioner of Income Tax (Exemptions) within its jurisdiction.
2. Scrutiny by Income Tax Department: The Income Tax Department will scrutinize the application and may request additional information or documents for verification.
3. Issuance of Registration Certificate: If satisfied, the Commissioner will grant registration under Section 12A, providing the NGO with tax exemption benefits.

Benefits of 12A Registration

1. Tax Exemption: NGOs with 12A registration are exempted from paying income tax on their surplus income.
2. Donor Attraction: Donors are more inclined to contribute to NGOs with 12A registration as their donations are eligible for tax benefits under Section 80G.
3. Enhanced Credibility: 12A registration enhances the credibility and trustworthiness of the NGO as it signifies compliance with legal requirements and transparency in financial matters.

Section 80G Registration:

Eligibility Criteria for 80G RegistrationTo qualify for 80G registration, an NGO must fulfill the following conditions:

1. 12A Registration: The NGO should hold 12A registration or be eligible for such registration.
2. Financial Transparency: It must maintain regular books of accounts reflecting all income, expenditure, and activities.
3. Genuine Activities: The NGO's activities should be genuine and not aimed at benefiting any particular religious or caste group.

Procedure for Obtaining 80G Registration: The process for obtaining 80G registration involves the following steps:

1. Application Submission: The NGO must apply for registration in Form 10G to the Commissioner of Income Tax (Exemptions) within its jurisdiction.
2. Document Submission: Along with the application, the NGO must submit necessary documents such as audited financial statements, details of activities, and copies of registration certificates.
3. Scrutiny and Approval: The Income Tax Department will scrutinize the application and verify the NGO's compliance with the prescribed conditions. If satisfied, it will grant registration under Section 80G.

Benefits of 80G Registration

1. Tax Deduction for Donors: Individuals and corporations donating to NGOs with 80G registration can claim deductions on their taxable income.
2. Philanthropic Encouragement: 80G registration incentivizes individuals and businesses to contribute towards charitable causes, thereby promoting philanthropy.
3. Widened Support Base: NGOs with 80G registration attract a larger pool of donors who are motivated by tax benefits, thus expanding their support base.

Also read:sections 8 company registration

Conclusion

In conclusion, 12A and 80G registrations are instrumental in promoting philanthropy and supporting the activities of NGOs in India. These registrations not only provide tax benefits to donors but also enhance the credibility and sustainability of charitable organizations. By adhering to the prescribed criteria and maintaining transparency in their operations, NGOs can qualify for these registrations and continue benefiting from associated tax exemptions, thereby making a significant impact on society.