80G Certificate

80G Certificate is issued to a non-profit organization or a charitable trust or non-governmental organizations (NGO), or a Section 8 Company by the Income Tax Department. The intention behind issuing the 80G certificate is to promote 50% tax benefits to donors so that more and more donors can donate funds to these organizations.

12A Certificate

NGOs are non-profit organizations that are meant for charitable and non-profit activities. However, they might generate income and would be required to pay income tax as per government norms, but if an NGO gets 12A certificate, then this certificate exempts NGO form income tax under section 12A of the Income Tax Act. The Section 12A of the IT Act, 1962 does not differentiate between charitable and religious Trusts. Hence 12A registration is valid to both the kinds of non-profit organizations.

Eligibility to Obtain 80G and 12A Certificate

• NGO income or assets should be exclusively for the purpose of charity.
• Proper books of accounts of the NGO should be maintained, including all receipts and expenditures.
• NGO should not be formed with the benefit of a particular religious, community or caste.
• NGO should have core objective of charitable purposes, and whole income should be from donations. If in case, NGO has a business income then the trustee of the NGO should maintain separate books of accounts to ensure that NGO should not divert donations.

Why apply for 80G & 12A Registration?

• NGO can avail income tax exemption by getting itself registered and fulfilling certain other formalities, but such registration does not provide any benefit to the person making donations.
• To provide income Tax benefits to the “donors”, all NGO’s must apply for 80G & 12A certification.
• If an NGO gets itself registered under section 80G & 12A then the person or the organization making a donation to the NGO will get a deduction of 50% of donation amount from taxable income.
• An NGO is applicable for government funding only, if it is registered under 80G & 12A.
• A newly registered NGO can also apply for 80G & 12AG registration.
• NGO does not have to pay tax for the entire lifetime if it gets registered under section 80G & 12A.
• An NGO can apply to obtain 80G and 12A certificate just after the registration of an NGO.

Benefits of 80G Certificate & 12A Certificate: –

• Tax Benefits: – NGO can avail income tax exemption by getting 80G certificate
• Attract Donors: – If an NGO gets itself registered under section 80G & 12A then the person or the organization making a donation to the NGO will get a deduction of 50% of donation amount from taxable income
• Life time tax exemption: – NGO do not have to pay tax for the entire lifetime if it gets registered under section 12A
• Government Funding: – An NGO is applicable for government funding, if it is registered under 80G & 12A

Documents Required for 80G Certificate & 12A Registration

• Copy of PAN (NGO).
• Duly filled in Form – 10G.
• Trust Deed / MOU.
• List of donors along with their address and PAN.
• List of governing board of trustee’s members with their contact details.
• Original Registration Certificate.
• For Proposed Registered office (Residential or commercial)
• Any Utility bills
• 2 Scan copy of Rent agreement with NOC from owner