Section 12A and 80G — NGO and Trust Registration Under Income Tax

Section 12A provides income tax exemption to charitable and religious trusts and NGOs — their income from charitable activities is not taxed. Section 80G provides the complementary benefit — donors who contribute to 80G-registered organisations can claim income tax deduction on their donations. Together, these registrations are essential for any NGO or charitable trust. Here is the complete guide.

Section 12AB — Tax Exemption for NGOs/Trusts

• Charitable or religious institutions, trusts, societies registered under Societies Registration Act and Section 8 Companies can apply for Section 12AB registration
• Once registered: Income applied to charitable objects is exempt from income tax
• The institution must apply its income for charitable purposes — accumulation of income beyond 15% requires Form 9A filing
• Provisional registration: For new entities — granted for 3 years under Section 12AB (applied in Form 10A)
• Permanent/regular registration: Applied for at end of provisional period — valid for 5 years, renewable

Section 80G — Tax Benefit for Donors

• 80G-registered organisations can issue donation receipts — donors claim deduction in their ITR
• Deduction rates: 100% of donation amount (for PM's National Relief Fund, PM CARES etc.) or 50% of donation amount (for most other 80G organisations)
• Qualifying limit for most 80G organisations: Deduction limited to 10% of adjusted gross income (donations above this limit are not deductible in the year)
• Donor must submit 80G certificate with donation details — PAN of the donee organisation, transaction reference number (since 2022)

How to Apply — Form 10A

• Apply on incometax.gov.in → e-File → Income Tax Forms → Form 10A
• Documents to attach: Registration certificate of trust/society/Section 8 company, PAN of institution, trust deed/memorandum of association and rules, details of activities, audited accounts (for existing institutions)
• For 80G application: Additional details of donors, mode of receipt and prior year donation details required
• Application approved within 30-60 days — provisional/regular registration certificate issued online

Conclusion

Section 12AB and 80G registration are the two pillars of NGO tax compliance — providing income tax exemption to the organisation and donation deduction to contributors. SPOTON provides NGO registration, 12AB/80G application, Form 10A filing and annual compliance for charitable organisations in Kerala. Contact us for expert NGO compliance services.