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Difference Between 12A and 80G Registration

In India, non-profit organizations, including NGOs, Trusts, and Societies, can avail tax benefits under the Income Tax Act, 1961. Two essential registrations for tax exemptions are 12A and 80G registration.

•12A Registration provides income tax exemption for NGOs.

•80G Registration allows donors to claim tax deductions on their donations.

Both registrations help NGOs attract more donations, increase credibility, and reduce tax liability. In this article, we will explain the key differences, benefits, and application process for 12A and 80G registration.

What is 12A Registration?

Definition: 12A registration is a tax exemption certificate that allows non-profit organizations to be exempted from paying income tax on their surplus income.

Key Features of 12A Registration:

•Exempts NGOs from income tax on revenue received from donations and grants.

•Lifetime validity (if not canceled or revoked).

•Available to Trusts, Societies, and Section 8 Companies.

•Mandatory for applying for government grants and CSR funding.

•Must be obtained within 1 year of NGO formation for maximum benefits.

Example: If an NGO earns ₹10 lakhs from donations and has 12A registration, it does not have to pay income tax on this amount.

What is 80G Registration?

Definition: 80G registration allows donors who contribute to a registered NGO to claim tax deductions on their donations under Section 80G of the Income Tax Act, 1961.

Key Features of 80G Registration:

•Encourages donations by offering tax benefits to donors.

•Allows 50% or 100% tax deduction depending on the NGO’s approval status.

•Help NGOs attract more funding from individuals and corporates.

•Available to Trusts, Societies, and Section 8 Companies.

•Has a validity period of 5 years, after which renewal is required.

Example: If a donor contributes ₹1 lakh to an NGO with 80G registration, they can claim a tax deduction of ₹50,000 (50%) or ₹1 lakh (100%), reducing their taxable

Benefits of 12A and 80G for NGOs

•Complete tax exemption for NGOs under 12A.

•More donations, such as 80G, provide tax benefits to donors.

•Eligibility for CSR funding and government grants.

•Increases NGO credibility and trustworthiness.

•Encourages corporate and high-net-worth individual (HNI) donations.

Documents Required for 12A and 80G Registration

•PAN Card of NGO

•Registration Certificate (Trust Deed, Society Registration, or Section 8 Incorporation Certificate)

•MOA (Memorandum of Association) & Rules & Regulations

•Financial Statements (Last 3 years, if available)

•Bank Account Details

•Details of Trustees or Governing Body Members

Process for 12A and 80G Registration

Process 1: Apply Online on the Income Tax Portal

•NGOs must register through the e-Filing portal of the Income Tax Department.

Process 2: File Form 10A (for 12A) and Form 10G (for 80G)

•Submit required forms along with supporting documents.

Process 3: Review & Verification by Tax Authorities

•The Income Tax Department may request additional documents or conduct a verification.

Process 4: Approval & Certificate Issuance

•Once approved, the 12A and 80G certificates are issued.

Processing Time: 1-3 months

Conclusion

Both 12A and 80G registrations are essential for NGOs, Trusts, and Societies to get tax benefits, attract donors, and secure funding. 12A exempts NGOs from paying income tax, while 80G provides tax deductions to donors. Applying for both enhances credibility, compliance, and fundraising opportunities, making them crucial for NGO sustainability and growth. For more information click the link below:

https://www.compliancecalendar.in/section-8-company

https://www.compliancecalendar.in/niti-ayog-registration

https://www.compliancecalendar.in/80g-12a-registration

https://www.compliancecalendar.in/csr-1-registration

https://www.compliancecalendar.in/fcra-registration