12A Registration

This certification is provided under the Income Tax Act 1961 to non-profit organisations in India. Once registered under Section 12A, an NGO becomes eligible for tax exemption on its income, meaning it doesn’t have to pay tax on surplus funds generated through grants, donations, or other revenue as long as these funds are used for charitable purposes. This registration is crucial for NGOs as it helps in maximising the funds available for their activities.

Who can apply for 12A registration?

The following types of organisations are eligible to apply for 12A registration,

• Charitable Trusts: Organizations established for charitable purposes.
• Registered Societies: Societies that are formally registered under the Societies Registration Act or similar state laws.
• Section 8 Companies: Companies formed under Section 8 of the Companies Act 2013 specifically for promoting charitable activities.
• Religious Organizations: Groups that primarily focus on religious activities and charitable work.
• Educational Institutions: Non-profit schools, colleges, and educational foundations.
• Medical Institutions: Non-profit hospitals and medical research organisations

12A Registration Eligibility Criteria 

This section pertains to registering charitable or religious NGOs, enabling them to enjoy tax exemptions on income derived from donations. To qualify for Section 12A registration, an organisation must meet the following criteria:

• Nature of the Organization: Applicable to trusts, societies, or Section 8 companies that are established solely for charitable or religious purposes as defined under Section 2(15) of the Income Tax Act. This includes activities like poverty relief, education, medical relief, environmental preservation, and more. Organizations with these operations need to obtain 12A certificate for trust.
• Charitable Activities: The organization must actively engage in its stated philanthropic objectives without any profit motives benefiting specific individuals or groups. Those who fall under this criteria can get 12A certificate for trust
• Registration Proof: Must be duly registered as a trust, a society, or a Section 8 company under the relevant laws, with proof required during the application process.
• Income Utilization: All income and assets must be exclusively used for charitable or religious purposes, without any direct or indirect benefit to members or specific individuals.
• Financial Documentation: Proper bookkeeping and documentation must be maintained to reflect accurate financial operations.
• Tax Compliance: Annual tax returns must be filed on time, even with exempt status, to maintain this exemption.
• Political Neutrality: The organisation should not participate in or support political activities, as this can result in the revocation of the 12A status.

Benefit of 12A Registration

• Tax Exemptions: 12A registration allows your NGO to claim tax exemptions on income derived from its charitable activities. This means more funds can be directed towards fulfilling your mission.
•  Enhanced Credibility: Having 12A registrations demonstrates to the public and potential donors that your NGO is a credible and legitimate organization.
• Improved Record Keeping: The registration process requires that your NGO maintain proper financial records, which can improve the overall transparency and accountability of your organization.