In India, the registration under Section 12A & 80G Registration of the Income Tax Act, 1961, is vital for non-profit organizations (NGOs, trusts, and societies) aiming to operate effectively and attract funding.
Understanding 12A & 80G Registration
Section 12A of the Income Tax Act, 1961, allows non-profit organizations to be exempt from income tax on their surplus income. While Section 80G allows donors to claim a tax deduction for donations made to charitable organizations.
Importance of 12A & 80G Registration
Obtaining 12A registration establishes the organization as a legitimate entity focused on charitable purposes, which can enhance its reputation and trustworthiness. Having 80G registration is crucial for organizations to attract donations, as it assures potential donors of the tax benefits they will receive.
The Process of 12A & 80G Registration
- Fill out Form 10A & 10G.
- Submit Form 10A & 10G and documents to the Department (online or offline).
- Review by tax authorities.
- Receive registration certificate if approved.
Benefits of 12A & 80G Registration
- Tax Exemption: Organizations benefit from tax exemptions on surplus income, which can be redirected to charitable activities.
- Attracting Donations: Donors are more likely to contribute if they know they can claim tax deductions under 80G.
- Enhanced Credibility: Registration under these sections boosts the organization’s credibility and trustworthiness in the eyes of potential donors and beneficiaries.
- Access to Grants: Many government and private grants require 12A and 80G registrations as eligibility criteria.
Common Mistakes to Avoid During Registration
Incomplete Documentation: Failing to provide all required documents can lead to rejection. Ensure all necessary paperwork is included.
Incorrect Information: Filling out forms with incorrect or inconsistent information can delay the process. Double-check all details for accuracy.
Not Renewing 80G on Time: Forgetting to apply for renewal before the certificate expires can result in loss of tax deduction benefits for donors.
Lack of Clarity in Activities: Not clearly outlining the organization’s activities in the application can lead to misunderstandings about its charitable purpose.
Not Maintaining Financial Records: Poor financial documentation may raise red flags during the review process. Keep detailed and organized financial statements.
At Complete Tax, we understand that every business is unique. That’s why we offer tailored solutions to meet your specific needs and requirements. Our experienced professionals will guide you through every step of the registration process, ensuring compliance and peace of mind.
FAQ: Frequently Asked Questions
1. What is the difference between 12A and 80G registration?
- 12A offers income tax exemption to the organization, while 80G allows donors to claim tax deductions for their contributions.
2. Can an organization have both registrations?
- Yes, it is common and advisable for NGOs to obtain both to maximize benefits.
3. How often do I need to renew the 80G registration?
- 80G registration is typically valid for 3 years; renewal is required before expiration.
4. Is there a fee for these registrations?
- There are no direct fees for registration, but there may be costs associated with preparing documentation and professional assistance.
5. What happens if my application is rejected?
- Organizations can appeal the decision or reapply after addressing any issues raised by tax authorities.
Documents Required
12A Registration
- Trust Deed/Society Registration Certificate/Company Memorandum
- PAN Card
- Registration Certificate
- Detailed Project Report
- Financial Statements
80G Registration
- 12A Registration Certificate
- PAN Card
- Audited Financial Statements
- List of Activities
- Form 10G.
Contact Us :-
+91-7610577890
+91-9827087860
+91-8516001725
+91-9770152119
+91-8517801725
+91-8770370653
+91-7970084210
+91-7900708802
completetax2020@gmail.com
