All you need to know about section 12AB and 80G Registration

Introduction

12AB and 80G registration are essential for non-government organizations (NGOs) operating with a non-profit motive to support humans, nature, or animals. NGOs can be established as a trust, society, or Section 8 company. Registering under these sections allows both the NGO and its donors to receive tax benefits. Without this registration, the government requires the NGO to pay regular taxes on its income.

what is section 12AB?

The Finance Act, 2020 introduced Section 12AB under the Income Tax Act. It requires all trusts or institutions applying for registration under Sections 11 and 12 to also apply under Section 12AB. If your non-profit organization registers under Section 12AB, it will receive tax benefits. Without this registration, the NGO must pay income tax on its surplus for the year.

Who Needs to Register Under Section 12AB?

• Existing Trusts/NGOs : If your organization was already registered under Section 12A or 12AA, you must re-register under 12AB.
• New Trusts/NGOs : If you are starting a new charitable or religious organization and want tax benefits, you must apply for 12AB registration.
• Societies & Non-Profit Organizations : Any group working for charitable or religious purposes can apply.

Why Register Under 12AB?

• Tax Exemption : Your trust’s income won’t be taxed.
• Eligible for Donations : Donors can claim tax benefits under Section 80G.
• Mandatory Requirement : If you want to continue getting tax exemptions, you must register.

What to know before Section 12AB registration?

• Income tax authorities will give trusts and institutions applying for registration for the first time a provisional registration for three years.
• You must apply for the renewal of provisional registration at least six months before it completes three years.
• The entity must carry out charitable activities listed in the Income Tax Act.
• It is important that the entity does not involve itself in such activities which have the motive of profit.
• The entity is required to file an annual return in form 10D.
• It is necessary that an entity use its funds and assets only for charitable activities.

Benefits of Section 12AB

• The income will be exempt from taxation under the Income Tax Act.
• Can receive grants from the government, abroad, or other agencies.
• Benefits in FCRA registrations.
• Allow to receive recognition for the charitable activities.

List of required documents for section 12AB registration.

• registration documents of the company, trust, or society.
• Copy of the PAN card and Aadhar card of the directors.
• Digital signature of one of the directors.
• Audits reports for all financial years since incorporation.
• AOA and MOA copies.
• If you rent the place, you must get a no-objection certificate from the landlord.

Application Process

• Submit Form 10A (for new/existing registrations) or Form 10AB (for renewal/modifications).
• Apply online through the Income Tax e-Filing portal.
• The registration is valid for 5 years and must be renewed.