80 G & 12AA

Section 80G And Section 12AA

An NGO (society or trust) can avail income tax exemption by getting itself registered and complying with certain other formalities, but such registration does not provide any benefit to the persons making donations. The Income Tax Act 1961 has certain provisions which offer tax benefits to the “donors”. All NGO’s should avail the advantage of these provisions to attract potential donors. Section 80G is one of such sections. If an NGO gets itself registered under section 80g then the person or the organisation making a donation to the NGO will get a deduction of 50% from his/its taxable income. If an ngo gets registered under 12AA and 80g, then only it is applicable for any government funding. A newly registered ngo can also apply for 80g registration. The following documents are required for 80g registration.Section 12a and 80g is of a great relief. NGOs do not have to pay tax for the entire lifetime if it gets registered under section 12aa. Besides, the corporate and the ministries prefer to give donations to those who are having 12aa and 80g registration. By doing such, their taxes are deducted by 50% of the donation given. Today in this growing IT world, the website of a NGO is essential which speaks about the NGO profile, activates, their members, its history, address and the social work done by it. They should maintain their balance sheets, annual reports, accounts, records, bills, vouchers, photographs for proof of their social activities. This is of a real great help especially during the investigation by the IB officers during FCRA Registration or verification by the government officials applicable for government funding or any corporate officials applicable for corporate social responsibility funding.

Condition for registration u/s 80g :

For approval under section 80G the following conditions are to be met:
i) the NGO must not have any income which are not exempted, such as company income. If the NGO has business income, then it ought to preserve separate books of accounts and need not divert donations gotten for the purpose of such business if.
ii) the bye laws or goals of the NGOs must not contain any regulation for investing the income or possessions of the NGO for purposes aside from charitable activities.
iii) the NGO is not working for the advantage of particular religious community or caste.
iv) the NGO maintains routine accounts of its expenditures & receipts.
v) the NGO is appropriately signed up under the Societies Registration Act 1860 or under any law corresponding to that act or is signed up under section 8 of the Companies Act 2013.

Benefits of registration u/s 80g :

There is a ceiling limitation upto which the benefit is allowable to the donor. If the quantity of reduction to a charitable organization is more than 10 % of the Gross Total amount income calculated under the Act (as lowered by earnings on which income tax is not payable under any arrangement of this Act and by any quantity in respect of which the assessee is entitled to a reduction under any other arrangement of this Chapter), then the quantity in excess of 10 % of Gross Total Earnings shall not get deduction under section 80G. While computing the overall income of an assessee and for arriving at the deductible quantity under section 80G, first the aggregate of the sums donated needs to be discovered. 50 per cent of such contributions has actually to be found out and it must be limited to 10 per cent of the gross total income. The unwanted will have to be ignored if such quantity is even more than 10 percent of the gross overall earnings. The persons or company who donate under section 80G gets a deduction of 50 % from their taxable income. Below at times a confusion creeps in, that the tax advantage under section 80G is 50 %, but in fact it is not so. 50 % of the donation made is allowed to be deducted from the gross income and consequently tax is determined.

Benefits of Registration u/s 12AA :

1) The income applied for charitable or religious purpose will be considered as application of income i.e. expenditure incurred for charitable or religious purpose will be allowed while computing income of the trust.

2) The benefit of accumulating or setting aside of income not exceeding 15% for charitable or religious purpose will be available.

3) The accumulation of income, which is deemed as application of income as per section 11(2), shall not be included in the total income.

4) NGO’s receives various grants from government and other agencies. They are eligible to get grants and financial funding from various agencies. These agencies generally make grants to 12A registered NGO’s.

5) Benefit in Section 80G registration. NGO’s have to apply separately for Section 80G registration.

It is important to note that when registration is granted under section 12A, it does not mean that section 80G approval is to be given i.e. registration under section 12A will not provide automatic approval under section 80G. Section 80G applies only to charitable trusts or institution. It does not apply to religious trust or institutions.

6) Benefit in FCRA registration. NGO’s seeking foreign contributions have to obtain FCRA registration from the Ministry of Home Affairs.

7) Finance Act’2014 has extended the benefits of registration for prior years as well. These benefits have been extended to the trusts or institutions where the registration has been granted under section 12AA.

• The benefit of Section 11 and 12 will apply to trust or institutions for all the pending assessments on the date of such registration subject to condition that the objects and activities of Trust in the earlier years claimed are same on the basis of which the registration has been granted.

• Further, it is provided that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non-registration of such trust or institution for the said assessment year.

The above benefits would not be available in case of any trust or institution which anytime had applied for registration and the same was refused under section 12AA or a registration once granted was cancelled.

8) Registration under section 12A is one-time registration. Once the registration is granted to the trust, it will be hold good till the cancellation of registration. There is no provision which requires any renewal of registration. Thus, the benefits of registration can be claimed for lifetime by NGO.

Following documents are required for approval under Section 80g of Income Tax Act 1961:-

1. Copy of Registration certificate of the NGO and its bye-laws.
2. Copies of Detail of activities since its inception or last three years whichever is less.
3. Copies of audited accounts of the institution/NGO since its inception or last 3 years whichever is less.
4. Copy of Pan Card of the NGO
5. Details of the members of the NGO (Complete KYC)
6. Bank Statement.

With Result from 1st October 2009 it is not required for a trust to apply for renewal of 80G certificate, if the exact same stands on 01.10.2010 or valid upto a date thereafter unless division particularly ask Trust to obtain renewal. So Old 80G certification will remain legitimate if the exact same is valid.

In how much time a ngo can get 80g & 12aa registration:

Our team is expert in providing 80g & 12aa registration to various clients. The various clients whom we have provided registration are Save a child foundation, Atma Vani, Sanjeevani welfare foundation etc.

Our team can provide a Ngo 80g & 12 aa registration within 1.5 months from the day on which Ngo has provided all the above documents.