What is 12A and 80G Registration?

12A Registration is granted by the Income Tax Department. It allows an NGO to be exempt from paying income tax on the funds it receives. This registration is essential for non-profit organizations to avoid tax liabilities on donations, grants, and other income.

80G Registration is a related tax benefit that allows donors to claim tax deductions for their contributions to an NGO. This makes your NGO more attractive to potential donors, as they can reduce their taxable income by donating to your cause.

Without these registrations, NGOs will have to pay taxes, and donors will not receive tax benefits for their donations.

How to Obtain 12A and 80G Registration?

Obtaining 12A and 80G Registration is not a one-step process. It involves several legal procedures. For starters, the NGO must be registered as a Section 8 company or a trust. Once the Section 8 company registration is complete, you can proceed with the application for 12A and 80G.

Here are the steps you need to follow:

1. Register the NGO – Register as a Section 8 company, a society, or a trust. The choice depends on the legal structure you prefer for your NGO.
2. Apply for 12A Registration – After your NGO is registered, you can apply for 12A. This process involves submitting an application to the Income Tax Department, which verifies your NGOs non-profit status.
3. Apply for 80G Registration – After securing 12A, you can apply for 80G. This registration must be renewed every 5 years.

Both registrations can be applied together or separately. However, getting both is highly recommended for a smooth and transparent financial process.

Why is 12A and 80G Registration Important?

For an NGO, 12A and 80G Registration are crucial for multiple reasons. These registrations not only ensure tax-exempt status but also make your organization more credible and trustworthy in the eyes of donors.

Without 12A Registration, your NGO would be liable to pay taxes on the donations and grants you receive. This can significantly impact the funds available for your operations.

On the other hand, 80G Registration benefits your donors. They can claim a deduction on their taxable income, encouraging them to contribute more to your cause. It increases the likelihood of receiving more donations, which is vital for any NGOs sustainability.

Section 8 Company Registration and Its Role

A Section 8 company registration is often the preferred legal form for NGOs in India. This registration allows NGOs to operate as non-profit entities, ensuring that no profits are distributed among members. Instead, the profits are reinvested in the NGO's activities.

Section 8 company registration offers credibility and is required for obtaining both 12A and 80G Registration. It also provides various other benefits, such as the ability to receive foreign funding and apply for grants from international organizations.

Conclusion

In conclusion, obtaining 12A and 80G Registration is essential for any NGO registration that aims to operate transparently, raise funds, and build credibility. When paired with Section 8 company registration, these legal steps ensure your NGO remains tax-exempt and attractive to donors. If you're unsure about the process or need professional guidance, NGO Expert is here to help you navigate the registration process smoothly and effectively.