Benefits of NGO Donation Tax Exemption under Section 12A and 80G

Introduction

Have you heard about NGOs? Many organizations work selflessly to support people with basic human needs. Under the Income Tax Act, Sections 12A and 80G provide important provisions for NGO donation tax exemption. If a trust or organization is registered under these sections, it becomes eligible for tax benefits. This not only helps the NGO but also provides tax exemptions to donors contributing to the cause.

What is section 12A?

Organizations like NGOs, charitable trusts, and section 8 companies are working to help people without any motive of profit. for these kind of such organization, it is important to register in section 12A to avail the taxation benefits. Organization must involve in charitable activities to be eligible for the registration of 12A.

Who needs to register under section 12A?

If you are willing to start a charitable trust in India, you must register your trust or organization under section 1A.
Any Group who is involved in charitable activities needs to file 12A.

Eligibility for section 12A

To be eligible for registration of sections 12A, there are several things that an organization must know about. The following information is:

• Section 12A registration is applicable for the organizations whose only intention is charity.
• There should not be any profit-purpose activities in the trust or institutions.
• It must be registered as a trust or society under the appropriate laws.
• The organization is not allowed to spend income or assets for the benefits of its members or any other specific person.
• It is mandatory for organizations to maintain the books of accounts.
• Must file an income tax return under section 139 of the income tax act, even if it is eligible for exemption.
• The organization is not allowed to engage in any political activities.

Benefits of Section 12A for NGOs

Tax exemption

• Organizations who are having 12A certificate with them are exempted from paying income tax on their generated income. Without registration, they cannot avail of these benefits.

Grants from national and international organizations

• If the trust or society is registered, they can get funds from government, private, and international organizations, which will help an organization to enhance their credibility.

proof of existence

• The certificate under section 12A acts as a valid and clear proof of the existence of the organization. It helps trust to secure funds or loans from the government.

Wide recognition

• With the 12A certificate, NGOs and societies are allowed to gain wide recognition with the charitable activities.