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.
We provide online 12A registration process and 80G5 registration services, ensuring tax exemption approvals for NGOs with compliance support.
What is section 80G?
A NGO gets taxation benefits by registering itself but the there is no profit for the person who is making donations. The income tax offers tax benefits to donors as well in certain provisions. Section 80G is one of such sections which provides the benefits to donors. The purpose of this section is to support entities that are engaged in social or cultural development activities.
Who Should Register?
The following organizations need to register under Section 80G:
- NGOs (Non-Governmental Organizations)
- Charitable Trusts
- Societies
- Section 8 Companies (Non-Profit Companies)
- Religious or Charitable Institutions (only if involved in charitable work)
Why Register Under Section 80G?
- It allows donors to claim tax benefits on their donations.
- Makes the organization more trustworthy for donors.
- Helps attract more donations.
Eligibility for 80G Registration
- The organization must register as a trust, society, or non-profit company.
- It should not use its income for personal benefits.
- It must avoid involvement in political or purely religious activities.
- Proper financial records must be maintained.
- It should register under Section 12A to receive a tax exemption.
Conditions need to fulfill for Section 80G registration.
- The NGO should not have any income which are not exempted. If, the NGO has business income then it should maintain separate books for accounts and it must not divert donations for the business purpose.
- The NGOs can not spend their income or assets in such activities which are not charitable.
- The NGO cannot work for the benefit of a specific religious community or caste.
- It must maintain the regular accounts of its income & expenditures.
- The organization must maintain the details of all donors.
- Tax deductions under section 80G will not be available to donors who opt for a reduced rate of tax.
Benefits of section 80G registration.
- Registration under section 80G provides benefits to the donors who are giving donations to the NGOs who has 80G certificate with them.
- By availing 80G certificate, NGO can attract more donors.
- NGOs also can apply for the FCRA registration for international funding.
List of documents required for section 80G registration.
- Registration certificate of company, trust, or society.
- Details of activities since its corporation.
- Digital signature of one of the directors.
- Section 12AB certificate.
- Required to fill form 10A/ 10AB.
Conclusion
Registration of section 12AB allows the Non profit organization an exemption from tax rates. If it fails to register, then they are applicable for ITR filing. On the other hands, Section 80G ensures that a person who is donating to the NGO can deduct the amount from their taxable income, which will help NGO to lead more donations.
Suggested Read :
Exemptions under Section 80G and 12A / 12AA
How to apply for Section 12AA registration?
Annual Compliances for Trust in India
Renew a Trust License in India
FAQ
1. What is section 12AB and 80G?
12AB and 80G are the provision of Income tax act. with the help of 12AB registration, All the income which is earned by NGO is exempted from tax.
2. Is it compulsory to register the trust?
While creating the charitable trust, it is mandatory to register it to avail of the tax benefits and legal recognition
3. Why 80G registration is needed?
The primary purpose of 80G registration is to encourage donors to donate funds to these non-profit organizations.
4. Who is eligible for the registration under section 12AB?
Trusts or institutions who are genuinely involved in charitable activities are eligible for the registration under section 12AB.
5. When did section 12AB come into effect?
On 1st June 2020, the section 12AB comes into effect.
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