-They must not have any income generated from a business
-They should either be a charitable trust or a registered society
-Such organizations should not be using their assets or income for any other purpose other than making charity
-They must maintain a regular book of accounts in favor of their receipts and expenses.
-The trustees or any other body governing the organization should not be involved in deriving any undue benefits from these funds
-They should not be working for the benefit of any particular caste or religion
-In the case of business-related income, the organization should maintain a separate book of accounts. However, the donations received by the NGO must not be used for such businesses.
Section 12 A of the Income Tax Act, 1961, is a onetime tax exemption provided to trusts, NGOs and Section 8 Companies. Organizations holding a registration under section 12A are exempted from paying taxes on their surplus income. NGOs are organizations involved in charitable and non-profit activities. However, they do earn income and they are required to pay tax as per normal rates if not registered under section 12A, Income Tax Act.
The following documents are required for 12A registration:a-Documental evidence of the creation of the Trust or NGO {Trust Deed of a Trust; -Registration Certificate and Memorandum of Association {MOA} of a society}
-Section 8 companies need to submit a certificate of incorporation and copies of MoA and AoA of the company
-Form 10A.
-Three-year bank account statement of the Trust.
-PAN of the organization
An application for fresh registration under section 12A will be given to Principal Commissioner or Commissioner, as per provisions of section 12AB. A provisional registration for 3 years will be given to organisations. The registration once granted shall be valid for three years from the Assessment Year from which the registration is sought. Application for renewal of such new registration needs to be submitted:
- at least six months prior to the expiry of validity period or
- within 6 months from commencement if activities,whichever is earlier.
The provisional registration so granted shall be valid for a period of 3 years and hence needs to be renewed at the end of the above mentioned timelines. The registration so renewed shall be valid only for 5 years and needs to be renewed at the end of each 5 years.
Important Note: In cases of new registration, application shall be submitted, at least one month prior to the commencement of the previous year relevant to the assessment year for which registration is sought, meaning thereby new NGO will not be entitled to have the benefit of registration of section 12AB in the first year of operation.
All registered NGOs are required to apply for re-validation in Form No. 10A, within three months from 1st April 2021. Registration so re-validated shall be valid only for 5 years. The application for the renewal of registration (after five years) needs to be submitted at least six months prior to the expiry of validity period. The renewal application will be submitted in the Form No. 10AB.
Where any organisation’s registration has become non-operative due to simultaneous exemptions in various other sections [10(23C)] in that case it has to reapply under section 12AB. The registration will be given for 5 years, has to be renewed in every five years. The application to be submitted at least 6 months prior to expiry of registration.
Where an organisation has been granted registration and subsequently, there is change or modification of objectives of that organization, then it has to re-apply for registration with modified or changed objectives under section 12AB. The registration will be given for 5 years and needs to be renewed in every five years. The application for registration shall be submitted within 30 days from such change in objectives.
The following documents are required to be submitted:
a) Self-certified copy of incorporation document of Trust/Societies (created under instrument or otherwise)
b) Self-certified copy of registration with Registrar of Companies or Registrar of Firms or societies or Registrar of Public Trusts, as the case may be
c) Self-certified copy of registration under FCRA, if the applicant is registered under such Act
d) Self-certified copy of existing order of registration under section 12A or 12AA or 12AB, as the case may be
e) In case of existing entities, copies of annual accounts for the period not exceeding 3 years immediately preceding the year in which the application is made
f) Where the income of the entity includes profits and gains of business as per the provisions of sub-section (4A) of section 11, copies of annual accounts and audit report u/s 44AB for 3 years immediately preceding the year in which the said application is made
g) Self-certified copy of the documents evidencing adoption or modification of the objects
h) Notes on the activities of the applicant trust or institution
i) If registered on DARPAN Portal, then details of such registration
The organisations applying for registration/ revalidation as per the amended provisions of section 80G, is mandatorily required to give the details of its Registration number with Darpan portal of Niti Aayog
This is also mandatory in the situation where the applicant organisation receives or intends to receive any grantor assistance from either the Central Government or state Government.
