12A and 80G Registration: Essential Tax Benefits for NGOs
For Non-Governmental Organizations (NGOs), charitable trusts, and non-profit entities operating in India, obtaining 12A and 80G registrations is not merely an option—it is a strategic necessity. These registrations provide the dual advantage of tax exemption for the organization and tax deductions for donors, making them fundamental to sustainable fundraising and operational efficiency.
Section 12A of the Income Tax Act, 1961, grants income tax exemption to NGOs on their surplus income, ensuring that every rupee earned can be reinvested into charitable activities. Section 80G provides donors with tax deductions on their contributions, incentivizing philanthropy and enabling NGOs to attract larger donations from individuals and corporates alike. Together, these registrations form the financial backbone of India's charitable sector.
Understanding Section 12A Registration
Section 12A registration is the primary tax exemption mechanism for charitable and religious trusts, societies, and Section 8 companies in India. Once registered, the organization is exempt from paying income tax on its income derived from charitable activities, including donations, grants, and income from property held under trust.
Key Features of 12A
- • One-time registration process
- • Valid for lifetime (unless revoked)
- • Applies to entire income of the trust
- • No tax on surplus/donations received
- • Mandatory for claiming exemption
Provisional vs Permanent
- Provisional: Valid for 3 years (new regime)
- Permanent: After satisfactory 3-year compliance
- • Applies to registrations after April 2021
- • Pre-2021 registrations need re-validation
Understanding Section 80G Registration
While 12A benefits the organization, Section 80G benefits the donors. When an NGO has 80G registration, donors can claim tax deductions on their donations, significantly reducing their taxable income. This makes donating to your organization financially attractive for individuals and companies alike.
100% Deduction Category
Donations eligible for 100% deduction (no limit):
- • National Defence Fund
- • Prime Minister's National Relief Fund
- • National Children's Fund
- • Chief Minister's Relief Funds
- • Zila Saksharta Samiti
- • National/State Blood Transfusion Council
50% Deduction Category
Most NGOs fall under this category:
- • 50% of donated amount deductible
- • Subject to 10% of adjusted gross total income
- • Applies to charitable trusts and societies
- • Donors get donation receipts with 80G details
Eligibility Criteria for 12A and 80G
Entity Types Eligible
Trusts
Public charitable trusts registered under Indian Trusts Act, 1882 or respective state laws.
Societies
Registered under Societies Registration Act, 1860 or state equivalents.
Section 8 Companies
Companies formed for charitable purposes under Companies Act, 2013.
Charitable Activities Covered
- ✓ Relief of the poor, education, medical relief
- ✓ Preservation of environment (including watersheds, forests, and wildlife)
- ✓ Preservation of monuments or places or objects of artistic or historic interest
- ✓ Advancement of any other object of general public utility (with conditions)
- ✗ Activities for the benefit of a particular caste or community (not eligible)
- ✗ Activities carried on for profit (not eligible)
Step-by-Step Application Process
Ensure Entity Registration
Before applying for 12A/80G, ensure your NGO is registered as a Trust, Society, or Section 8 Company. Obtain PAN card in the name of the organization.
Prepare Required Documents
Gather registration certificates, PAN cards, address proofs, activity reports, audited financial statements (if applicable), bank statements, and trustee/director details.
File Form 10A for 12A Registration
Submit online application through Income Tax e-filing portal. Upload all required documents. Form 10A must be filed with the Principal Commissioner or Commissioner of Income Tax.
Income Tax Verification
The Income Tax Department may conduct inquiries, request additional documents, or conduct physical verification of premises and activities. Respond promptly to any queries.
Receive 12A Order
Upon satisfaction, the Commissioner issues a registration order granting 12A status. For new registrations, this is provisional for 3 years.
Apply for 80G (Form 10G)
After obtaining 12A, file Form 10G for 80G registration. 80G cannot be obtained without 12A. Provide additional donor-related compliance information.
80G Approval and Certificate
After verification, receive 80G certificate. Valid for 5 years (under new regime) and requires renewal. Issue 80G receipts to donors with unique serial numbers.
Documentation Checklist
Organizational Documents
- ☐ Registration certificate (Trust Deed/Society/MOA)
- ☐ PAN Card of organization
- ☐ Address proof of registered office
- ☐ Trust Deed/Society Rules/MOA & AOA
- ☐ Registration with Charity Commissioner (if applicable)
Financial Documents
- ☐ Audited financial statements (3 years if applicable)
- ☐ Bank statements (last 12 months)
- ☐ Donation receipts and utilization records
- ☐ List of donors and amounts
- ☐ FCRA registration (if applicable)
Trustee/Director Documents
- ☐ PAN and Aadhaar of all trustees/directors
- ☐ Photographs of office bearers
- ☐ Address proof of key persons
- ☐ Resolution authorizing application
Activity Documents
- ☐ Activity report (last 3 years or since inception)
- ☐ Project reports for ongoing/future activities
- ☐ Beneficiary details and photographs
- ☐ Media coverage (if any)
Post-Registration Compliance
| Compliance | Form | Due Date | Consequence |
|---|---|---|---|
| Income Tax Return | ITR-7 | September 30 | Penalty, possible revocation |
| Audit Report | Form 10B | With ITR | Loss of exemption |
| Donor Receipts | 80G Receipts | Immediate after donation | Donor complaints, penalties |
| 12A Renewal | Form 10A | Before 3-year expiry | Loss of tax exemption |
| 80G Renewal | Form 10G | Before 5-year expiry | Donors lose deduction benefit |
Common Mistakes to Avoid
- ⚠️ Mixing Personal and Organizational Funds: Never use NGO funds for personal expenses. Maintain strict separation.
- ⚠️ Non-Maintenance of Books: Proper books of accounts are mandatory. Cash transactions should be properly documented.
- ⚠️ Missing Filing Deadlines: Late filing of ITR can lead to penalties and jeopardize registration status.
- ⚠️ Failure to Issue Proper Receipts: All donations must be acknowledged with proper 80G receipts containing unique serial numbers.
- ⚠️ Non-Compliance with Renewal: Track renewal dates carefully. Late renewal can cause loss of registration.
Maximizing the Benefits
For Fundraising
- ✓ Display 12A and 80G on website prominently
- ✓ Mention tax benefits in fundraising appeals
- ✓ Create donor guides explaining deductions
- ✓ Target corporate CSR funds (require 80G)
For Compliance
- ✓ Maintain separate bank account
- ✓ Get accounts audited annually
- ✓ File ITR-7 before September 30
- ✓ Track renewal dates (3-year for 12A, 5-year for 80G)