Section 12A and 80G Registration for NGOs — Process, Benefits and Compliance

Trusts, societies and Section 8 companies set up for charitable purposes can obtain two critical income tax registrations — Section 12A (to exempt the NGO's own income from tax) and Section 80G (to give donors a deduction on their donations). Together, these two registrations make an NGO tax-efficient and attractive to donors. Here is the complete guide.

Section 12A — Income Tax Exemption for the NGO

Under Section 12A (now 12AB after Finance Act 2020), a registered charitable trust/institution's income is exempt from income tax to the extent it is applied for charitable purposes. Without this registration, the NGO pays income tax on its surplus like any other entity.

• Application: Form 10A on the Income Tax portal (income tax e-filing site)
• Registration validity: 5 years (must be renewed before expiry)
• Provisional registration: 3 years for newly formed organisations (Form 10AB for final registration after 3 years)
• Eligibility: Trusts, societies, Section 8 companies with a charitable or religious object

Section 80G — Tax Deduction for Donors

Once an NGO has 80G registration, donations made to it qualify for income tax deduction in the hands of the donor. This significantly increases the NGO's fundraising ability.

• Donors (individuals and companies) can claim 50% of the donation as deduction from taxable income (subject to 10% of adjusted gross total income limit)
• Application: Also through Form 10A on the IT portal (can apply for both 12A and 80G simultaneously)
• Validity: 5 years (same as 12A — renewed together)
• The NGO must issue a donation receipt with its 80G registration number and PAN to the donor

Documents Required for 12A and 80G Application

• Registration certificate of the trust/society/Section 8 company
• Trust deed / Memorandum and Articles of Association
• PAN card of the organisation
• Audited accounts for the last 3 years (if existing entity) or projection for new entity
• List of activities undertaken — with evidence (photos, reports, beneficiary details)
• Bank account details

Post-Registration Compliance

• File ITR-7 annually — even if income is below exemption threshold
• Maintain proper books of accounts
• Get accounts audited if income exceeds ₹2.5 lakh (Form 10B — audit report)
• File Form 10BD (statement of donations received) annually by 31 May
• Issue Form 10BE certificate to each donor
• Apply to income tax for renewal 6 months before expiry of 5-year registration

Conclusion

Section 12A and 80G registrations are essential for any NGO or charitable trust that wants to operate tax-efficiently and attract donations. SPOTON provides complete 12A/80G registration services, annual compliance and ITR-7 filing for NGOs, trusts and Section 8 companies across Kerala. Contact us for expert NGO compliance services.