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All Non-Profit Organisations and Charitable institutions that have been registered under Section 8 are required to register their firm under Section 12A to procure exemptions in taxes. As per the Income Tax Act 1961, all Section 8 companies can seek registration to claim dispensation in taxes, provided that the requisite conditions are satisfied.
According to the new compliance provided for in the Income Tax Act with regards to the 12A/12AA and 80G registration, all NGOs having exemption u/s 12AA shall have to obtain a new registration u/s 12AB on or before March 31, 2022. The new concept of 12AB registration is aimed at removing the perpetual exemption of taxes and the registrations would be renewable every 5 years.
12A registration online is essentially a one-time registration granted by the Income Tax Department to trusts and other not-for-profit institutions to claim tax exemption. Generally, 12A registration is done immediately after the incorporation of Section 8 company. The purpose of this article is to inform you about 12A registration, 80G registration, 80G renewal and 80G deduction.
Before we move ahead, let us discuss the types of NGOs in India:
For a society registration, below mentioned documents are required:
Step 1: Log in to the Income Tax India e-Filing portal using login credentials and password.
Step 2: Navigate to Income Tax Forms under the e-File tab and select Form 10A/10AB, as the case may be, for 12A registration Online.
Step 3: Click on the option ‘Prepare and Submit online’ to fill in requisite details in the Form.
Step 4: Attach the required documents along with Form 10A/10AB.
Step 5: Submit the Form using Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).
Step 6: On receipt of application in Form No. 10A/10AB, the PCIT or CIT shall process the application within the prescribed time limit:
80G Registration help NGOs in the following ways:
With effect from April 1 2021, upon filing the application for 80G renewal, an order granting the applicant with the revalidated registration is passed within three months. This renewed registration under Section 12A and/or Section 80G is valid for a period of five years, post which it needs to be revalidated again. The 80G renewal has to be made at least six months prior to the expiry of the validity period of the registration.
After receiving the renewal application, the Principal Commissioner of Income Tax (PCIT) or Commissioner of Income Tax (CIT) will pass an order granting approval in writing in Form No.10AC and issue a 16-digit Unique Registration Number (URN) to the applicants.
It is worth mentioning that the PCIT/CIT may reject the application and is entitled to demand further documents from the applicant to test the genuineness of activities of the institution, as the case may be. The rejection order is also passed in Form No.10AC.
Section 80G is a facility available under the Income Tax Act that allows NGO taxpayers to claim deductions for various contributions made as donations to the NGO. Please note that not all charitable donations are eligible for deduction under Section 80G. Only donations made to the specified funds as per the Income Tax Act can qualify as a deduction.
The Government of India had made a move to introduce Section 80G deduction to encourage people to donate. The Government, by providing income tax relief, intends to motivate people to make more donations to worthy causes. The amount donated is allowed to be claimed as a deduction at the time of filing the Income Tax Return. The 80G deduction can be claimed by individuals, partnership firms, HUF, company and other taxpayers, irrespective of the income earned.
Trusts and institutions registered under Section 80G are provided with a unique registration number by the Income Tax Department which is also required to be mentioned on the receipt of donors claiming 80G deduction. Also, the donor must note that this registration number needs to be valid on the date of a particular donation. If the donation is made while the Section 80G registration is no more valid, then the donation would not be eligible for deduction.
Form 58A is required to be filed if the taxpayers claim a 100% deduction on a donation. It is provided only for specific types of eligible deductions.
Form 10A is a form filed by entities willing to make a registration under Section 12A. The procedure for applying for Section 12A registration online has been made through Form 10A. A Digital Signature Certificate (DSC) of the founder or Author of Trust/Society/NPO is required for filing Form 10A. This application shall be addressed to the Commissioner of Income Tax along with the requisite documents.
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Form 10A shall be used for the following purposes
a. Application for revalidation of registration/approval for existing organizations registered/approved under section 12A/12AA/10(23C)/80G.
b. Application for provisional registrations/approval under section 12AB/10(23C)/ 80G
c. Due Dates to apply in Form 10A
i. Trusts already approved/registered and their approval/ registration is continuing an on 01-04-2021 : On or before 30-06-2021
ii. Trusts making application for provisional registration/ approval : 1 month before the commencement of the previous year from which the said approval is sought.
Form 10AB shall be used for the following purposes
The applicant or recipient of the 80G registration must comply with the requirements specified below
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