HOW A NGO CAN GET TAX EXEMPTION UNDER INCOME TAX ACT, 1961

HOW A NGO CAN GET TAX EXEMPTION UNDER INCOME TAX ACT, 1961

HOW A NGO CAN GET TAX EXEMPTION UNDER INCOME TAX ACT, 1961

 

An NGO can register itself under the 12A and 80G of the Income Tax act, 1961 to get the exemption of the Income of the NGO, further, it also enhances government grants in the NGO.

 

WHAT IS 12A REGISTRATION FOR NGO?

12A is a one-time Registration that can exempt Income of the NGO which is incorporated in the form of Trust/Society/Section 8 Company.

 

NGO [Non-Governmental Organization] implies any non-profit association that works for a charitable mission. In India, an NGO can be set up as a Trust, a Society, or a Section 8 Company.

At TheLegalBank, we will assist you with choosing the correct alternative and guide you through the whole NGO enrollment process.

WHAT ARE THE BENEFIT OF 12A REGISTRATION

There are various benefits of Section 12A registration mentioned as below:

1) The income received for charitable or religious purposes will be considered as an application of income i.e. expenses incurred for charitable or religious purposes will be allowed while computing income of the trust.

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

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

4) NGO’s receive various grants from government and other non-government agencies. They are eligible to get grants and funding from various sources. These agencies generally prefer 12A registered NGOs.

5) Benefit in Section 80G registration. NGOs 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 institutions. It does not apply to religious trust or institutions.

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

  • 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 the condition that the objects and activities of Trust in the earlier years claimed are the 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.

 

WHAT ARE THE DOCUMENTS REQUIRED FOR 12A REGISTRATION

    1. Duly filled and signed Form 10A.

    2. Declaration under section 13(1) (c )

    3. Details project report for 2 years.

    4. NOC with an electricity bill of the premises of the Trust/Society/Section 8 Company.

    5. Annual Accounts of the Ngo since the inception/ last 3 years.

    6. Trust Deed/COI/MOA of the NGO

    7. ID proof of the Trustee/President/Directors.

    8. List of activities carried by Ngo in the last 3 years.

    9. Details of Donation received and made by the NGO since inception

    10. Statement/Details of the Bank statement of NGO.

    11. Undertaking under section 2(15).

    12. ITR of the NGO along with an Audit Report in 10B.

    13. Letter of authorization.

    14. Proof of acquisition of assets.

    15. List of changes made in trustee/Members/directors, if any.

    16. Details of registration under FCRA, if applicable

    17. MOA/Trust Deed/Rules of society should have the following clause

  • Irrevocability clause

  • A beneficiary is a section of a public not specific individual

  • Transferability clause in case of dissolution.

HOW TO REGISTER FOR 12A REGISTRATION

 

Step 1  

Login on https://www.incometaxindiaefiling.gov.in/home.

Step 2

Select the Income-tax form from e file tab

Step 3

Select form 10A from the Forms along with the assessment year as applicable.

Step4

Submit the form 10 a with the required attachment.

 

BUSINESS PROBLEMS? ONE SOLUTION! - THELEGALBANK (ZUMOSUN GRP)

TheLegalBank provides complete solutions related to the 12A and 80G registration along with the incorporation of NGO, you can contact us on 9116098980 or drop an email at caprakash69sharma@gmail.com for the first free consultation. Our experts are available to serve you.

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