12A & 80G Registration

As registration under Section 12A is for tax exemption, an NGO which has not registered under this cannot enjoy the privilege of tax exemption and would have to pay taxes just as any normal registered company would during the year.

Benefits:

• Provision to gain grants from governments and international organisations.

• Registration certificate serves as valid proof of the purpose of the NGO and its operations.

• All NGOs, be they trusts, companies, or societies, are eligible to avail exclusion from taxes

• FCRA registration benefits.

As per Section 80G of the Income Tax Act, if an NGO gets an 80G certification then it’s donors will be allowed to reduce the amount of donation made from its total Income (proportion of deduction allowed depends on the type of organisation), thus being incentivised to contribute some part of their disposable income towards good causes.

Benefits:

• 80G certification enhances the prospects and credibility of any organisation

• Donors reap the benefits of less taxable incomes

• Possibility of attracting more donors

• Eligibility to get government funds

• NGO owners can seek foreign contributions without many hassles

New terms of Registration and Re-registration under Section 80G and 12A

• Newly established trusts applying for income tax registration will be given provisional registration for three years. It becomes due for renewal either upon commencement of activities or upon completion of 3 years.

• For Re-Registration, the tenure will be revalidated by income tax authorities for a period of 5 years and renewal will fall due upon completion of 5 years.