80G Registration Process

The 80G Certificate is one granted to the non-profit organizations by the Income Tax department. This is a genuine way to avail the tax deduction on the basis of charity and donations to such organizations. It is a well-planned way to avail such provisions. The Income Tax Department is involved in the intensive scrutiny during the entire procedure. The main objective of the 80G Certificate is to encourage the donors to donate to such funds and organizations. This would provide tax exemption to the donors.

Proper documentation and accounting of the organization must be maintained.

The organization applying for the 80G Registration must achieve well-planned and organized accounting standards. The entire money in form of donations must be used for a social cause only. This must be further reflected in the accounting and documentation of the organization. The Income Tax Department will provide the 80G Certificate after all the legality and verification is done.

Unbiased towards any faith, belief, or culture

The organization that applies for the 80G Certificate must not follow any kind of religious, caste, creed, or any other form of bias. In case any such involvement is found, then the certificate for tax exemption will not be issued by the Income Tax Department.

The organization must be registered

The non-profit organization must be registered under the Societies Registration Act 1960 or under Section 25 of the Companies Act 1956. In case proper registration is not done, then the 80G Certificate will not be availed.

12A Registration Process

What is Registration under Section 12A?

It is a registration done by NGO to get an organization income exempted from Tax. All income shall not be taxable after 12A registration. If NGO does not get 12A registration, income tax is payable on surplus during the year.

PROCEDURE FOR REGISTRATION:-

Step-1: Dully filled-in application will be submitted to the exemption section of the Income Tax Department.

Step-2: NGO will receive notice for clarifications from Income Tax Department in 2-3 months after applying.

Step-3: Reply of notice will be submitted by the consultant along with all relevant desired documents to the Income Tax Departments.

Step-4: Consultant will personally visit the Income Tax Departments to follow-up the case on behalf of the applicant organization.

Step-5: Exemption Certificate will be issued.

Documents required for registration u/s 12A AND 80G:

1. Dully filled in Form – 10A for registration u/s 12A registration;

2. Dully filled in Form – 10G for registration u/s 80G registration;

3. Registration Certificate and MOA /Trust Deed (two copies – self attested by NGO head);

4. NOC from Landlord (where registered office is situated);

5. Copy of PAN card of NGO;

6. Electricity Bill / House tax Receipt /Water Bill (photocopy);

7. Evidence of welfare activities carried out & Progress Report since inception or last 3 years;

8. Books of Accounts, Balance Sheet & ITR (if any), since inception or last 3years;

9. List of donors along with their address and PAN;

10. List of governing body board of trustees members with their contact details;

11. Deed for verification Original RC and MOA /Trust;

12. Authority letter in favor of NGO Factory;

13. Any other document/ affidavit / undertaking information asked by the Income Tax department.

What is Section 12-A of Income Tax Act?

Income of an organization is exempted if NGO has 12-A registration. This is one time registration.

What is section 80-G of Income Tax Act?

If an organization has obtained certification under section 80-G of Income Tax Act then donors of that NGO can claim exemption from Income Tax. Earlier it was not  not one time registration and trust were required to get 80G Certificate renewed after validity period.

When an organization can apply for registration under section 12A and 80G of Income Tax Act?

Application for registration under section 12A and 80G can be applied just after registration of the NGO.

Where to apply for registration under section 12A and 80G of Income Tax Act?

Application for registration under section 12A and 80G can be applied to the Commissioner of Income Tax (Exemption) having jurisdiction over the institution.

Can both the application under section 12A and 80G of Income Tax Act be applied together?

Yes, Both applications can be applied together or it can be also applied separately. If some organization is willing to apply both applications separately, then application for registration u/s 12A will be applied first. Getting 12A registration must for applying application for registration u/s 80G of Income Tax Act.

What is the timeline for getting registration under section 12A and 80G of Income Tax Act?

If application for registration under section 12A and 80G will be applied through NGO factory, it should take 3-4 months

What applications Form are being used for applying for registration under section 12A and 80G of Income Tax Act?

For 12A registration : Form 10AFor 80G registration : Form 10G ( For New Application and renewal both)

What are the conditions on section 80G?

There are few conditions on section 80G:·         The NGO should not have any Income which is not exempted, such as business income. If the NGO has business income then it should maintain separate books of account and should not divert donations received for the purpose of such business.·         The bylaws or objectives of the NGOs should not contain any provision for spending the income or assets of NGO for the purpose other than charitable.

·         The NGO should not work for the benefit of particular religious community or caste.

·         The NGO should maintain regular accounts of receipt & expenditure.

·         The NGO should properly register under the societies Regulation Act 1860 or under any law corresponding to that Act or should register under section 8 of the Companies Act 2013.

Who can avail tax savings under 80G?

A person who makes an eligible donation is entitled to avail tax exemption under 80 G.
Donations made to listed trust and organizations only qualify for deduction u/s 80G

Who cannot avail tax savings under section 80G?
If a donation is made to a foreign trust you cannot qualify for tax savings under section 80G. If donations have been made too one or more political parties you cannot avail or claim deduction for such donations. Deductions cannot be claimed even for printing or publishing of brochures, flyers and pamphlets Donations by NRI if made to eligible institutions and trusts also qualify for tax exemption under section 80G. If donation is made from salary and if the donation receipt carries the name of the employer then employees can claim deduction under section 80G
What is the validity period of the registration under section 12A and 80G of Income Tax Act?

12A registration: Lifetime validity80G registration: 1to 3 years validity

What applications Form are being used for applying for registration under section 12A and 80G of Income Tax Act?

For 12A registration : Form 10AFor 80G registration : Form 10G ( For New Application and renewal both)

Percentage of Deduction under Section 80G

Payments made to Prime minister relief fund is eligible for 100% deduction u/s 80G without any limit. Deductions made to trusts like “Indira Gandhi memorial trust” is eligible for 50% deduction without any limit.
An approved institution i.e. institutions promoting and encouraging family planning is eligible for 100% exemption u/s 80G, Any charitable trust that falls under the list is eligible for 50% deduction u/s 80G

Mode of Payments Eligible for Tax Deduction

Donations made as gifts do not qualify for tax exemption or benefits. During a disaster such as floods, earthquake the donations made in kind will not help you with tax benefits. Only cash or cheque donations qualify for tax exemption
Donations can be deducted from salary and donation receipt should be obtained on the name of the employer. This will allow employees to claim exemptions under section 80G.

80G Registration – Compliance Requirements
  • The applicant or recipient of the 80G registration must comply with the requirements specified below:
  • The application can only be made by a public charitable trust, registered society, recognized educational institution or an institution funded by the Government.
  • The trust/institution applying for the certificate must be duly registered under the Societies Registration Act, 1860; or Section 25 of the Companies Act; or any other relevant Acts.
  • Applicants of the certificate must not represent any religion based or caste and creeds based activity.
  • The respective trust/institution should only utilize the donated funds for charitable purposes.
  • The registered trust/institution should not hold any income which is not exempted.
  • Entity’s pursuing any other businesses are required to maintain a separate account, so that the donations received are not confused with savings of any other kind.
  • The applicant should have maintained the appropriate annual returns, accounting and book keeping before applying for the certificate.
  • The recipient of the certificate must ensure the timely renewal of certificates, so as to receive the eligible tax benefits
Issue of Certificate

On receipt of the application, the Commissioner may pass a written order which would effectively register the trust/institution under Section 80G of the Income-tax Act. The Commissioner is also entitled to demand further documents from the applicant if the need for the same is felt, or reject the application. The registration accorded to the trust will be valid for a period of one-three years.

What is the Tax Exemption Limit on donation?

There is a limit on how much money can be exempted from the Income Tax:· If the amount of deduction to a charitable organization or trust is more than 10% of the gross total Income computed under the Act (as reduced by income on which income tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), then the amount in excess of 10% of Gross Total Income shall not qualify for deduction under section 80G.· The persons or organizations who donate under section 80G gets a deduction of 50% from their taxable Income.