Renewal of 12A and 80G Registration

Introduction

In India, charitable and not-for-profit organizations such as trusts, societies, and NGOs can apply for income tax exemptions and donor benefits under Sections 12A and 80G of the Income Tax Act, 1961. These registrations offer two key benefits: exemption of income for the organization (12A) and tax deductions for donors (80G). Earlier, once granted, these registrations were valid for a lifetime. However, with the Finance Act, 2020, the government has made it mandatory for all such organizations to renew their 12A and 80G registrations every five years to ensure continued compliance and transparency.

What is 12A and 80G Registration?

• Section 12A registration allows trusts and NGOs to claim income tax exemption on surplus income, provided it is used for charitable purposes.
• Section 80G registration enables donors to claim deductions on donations made to these organizations, encouraging public support.

Why is Renewal of 12A and 80G Registration Required?

The renewal of 12A and 80G registrations is now mandatory every five years to ensure that only active and compliant charitable organizations receive tax benefits. Previously granted permanently, these registrations were often misused by inactive entities. The renewal process promotes transparency, legal compliance, and accountability. It allows the Income Tax Department to regularly verify the organization’s activities and financial records. This system also boosts donor confidence, as it ensures their contributions remain tax-deductible. Additionally, it brings Indian NGO regulations in line with global best practices.

Renewal Procedure

The renewal process is done online through the Income Tax E-Filing Portal. Here is a step-by-step overview:

• Login to the Income Tax portal using the organization’s PAN expertise.
• Go to the “e-File” section, and choose Form 10AB for renewal (or Form 10A for first-time renewal).
• Fill in the required details, including PAN, registration number, and nature of activities.
• Upload the necessary documents.
• Submit the form using a Digital Signature Certificate (DSC) or EVC.
• After submission, the Income Tax Department will verify the application. If satisfied, they will issue a new certificate valid for 5 years.