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Section 12A and 12AA of the Income Tax Act offer registration for charitable and religious organizations to avail of tax exemptions. These sections are essential for organizations aiming to get tax benefits while carrying out non-profit activities. In this article, we’ll discuss what Section 12A and 12AA registrations are, the benefits, required documents, and the process for registering online.
Section 12A of the Income Tax Act allows a non-profit organization, including charitable or religious institutions, to claim tax exemption on income generated from activities related to their objectives. This registration is essential for receiving tax benefits and fulfilling the required compliance for any such organization.
Section 12A of the Income Tax Act allows a non-profit organization, including charitable or religious institutions, to claim tax exemption on income generated from activities related to their objectives. This registration is essential for receiving tax benefits and fulfilling the required compliance for any such organization.
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Over the past few years, there have been some important updates to how charitable and religious organizations register for tax exemption under the Income Tax Act. These changes aim to make the system more transparent and ensure that only genuinely charitable institutions get the benefits.
One of the biggest changes came with the Finance Act, 2020, which introduced a new section; Section 12AB. This section has now replaced Section 12AA for registration purposes.
Here’s what changed:
These updates were made to ensure that only genuine non-profit organizations receive tax exemptions and that their activities are monitored at regular intervals.
Section 12AA was the earlier method to register charitable or religious trusts for tax exemption. It was more relaxed and permanent. Section 12AB is the updated version, aimed at keeping a closer check on such entities. It introduces time-based registrations, renewals, and provisional approvals for new trusts, ensuring greater accountability. Below table will give you the precise information;
| Aspect | Section 12AA | Section 12AB |
| When it was applicable | This section was used before April 1, 2021 for registering charitable trusts. | This came into effect from April 1, 2021, replacing the old 12AA system. |
| Why it exists | It allowed charitable and religious organizations to get tax exemption status. | It was introduced to bring more transparency and regular monitoring of trusts. |
| Type of registration | The registration was granted once and lasted indefinitely, unless cancelled. | Registrations under this section are valid for 5 years and must be renewed. |
| What changed | Once registered, there was no need to reapply unless there were major changes. | Trusts now have to renew their registration regularly to continue tax benefits. |
| New Trusts | This section did not offer provisional registration to new trusts. | New trusts can get provisional approval for 3 years under this section. |
| Migration from 12AA | Trusts earlier registered under 12AA had to shift to 12AB to remain valid. | All existing trusts had to re-register under 12AB after it came into effect. |
| Forms used | Trusts applied using Form 10A. | Under 12AB, Form 10A is for provisional, and Form 10AB is for regular renewal. |
| Duration of registration | Valid for life, unless cancelled by the department. | Valid for 5 years, and needs to be renewed to stay active. |
| Audit Rule | If the trust’s income exceeded the basic limit, an audit was needed. |
This rule continues the same under 12AB. |
Once registered under Section 12A, the income of the organization becomes exempt from taxation, provided it is used solely for charitable or religious purposes in accordance with the organization’s stated objectives.
Organizations with 12A registration are eligible to apply for registration under Section 80G. This allows donors to claim deductions on their donations, thereby encouraging more contributions.
Registration under Section 12A increases the organization’s trustworthiness. Donors, government agencies, and grant providers often prefer supporting entities that are officially registered and compliant with tax laws.
Many government departments and companies especially for CSR funding require Section 12A registration as a prerequisite to release funds to a non-profit entity.
Charitable institutions registered under Section 12A can accumulate or set aside a portion of their income for future application towards charitable purposes without losing tax benefits, subject to certain conditions under Section 11(2).
Without 12A registration, the income of the organization may be taxed both in the hands of the trust and again when applied. Registration helps avoid such double taxation.
Collect Documents
File Form 10A Online
Verify Application
Respond to Queries
Get 12A Certificate
Follow these steps to apply for Section 12A registration through the Income Tax Department’s online portal:
Step 1: Visit the Income Tax e-Filing Portal: Go to www.incometax.gov.in and log in using your organization’s credentials.
Step 2: Navigate to ‘e-File’ Section: Under the e-File menu, select ‘Income Tax Forms’ then ‘File Income Tax Forms’.
Step 3: Search for Form 10A: Look for Form 10A, which is the prescribed form for applying for registration under Section 12A/12AB.
Step 4: Select the Relevant Section Code: Choose the applicable section under which you are applying (e.g., Section 12A for registration or revalidation).
Step 5: Fill out the Application Form: Complete the online form with details of the organization, trustees, the nature of activities, and other required information.
Step 6: Upload Required Documents: Upload the necessary supporting documents in PDF format as per the checklist.
Step 7: Verify and Submit the Form: Verify the form using a Digital Signature Certificate (DSC) or EVC (Electronic Verification Code).
Step 8: Acknowledgement: Once submitted, an Acknowledgement Receipt will be generated. Save it for your records.
Step 9: Processing by the IT Department: The Income Tax Department will review the application. If satisfied, it will issue a certificate of registration under Section 12AB.
12A registration exempts income of charitable or religious trusts from tax, provided it is applied for charitable purposes.
12AA was the process through which 12A registration was granted by the Income Tax Department before April 2021. Now, both are covered under Section 12AB.
Charitable trusts, societies, and Section 8 companies engaged in non-profit activities can apply.
Yes, if the NGO wants to claim income tax exemption on its receipts and donations, 12A registration is essential.
Yes, 12A registration must be applied for online through the Income Tax portal using Form 10A or 10AB.
12A provides income tax exemption to the organization; 80G gives tax deduction benefits to the donors.
Yes, Aadhaar authentication of authorized representatives is required for filing the online form.
PAN card, registration certificate, trust deed or MoA/AoA, NOC from the owner (if applicable), and activity details are required.
Form 10A is used for fresh registration under Section 12A and 80G as per new rules notified from April 1, 2021.
Form 10AB is used for renewal or revalidation of registration once the initial registration period expires.
New NGOs must apply within 1 month from the commencement of their activities.
No, there is no government fee for filing the application; however, professional fees may apply.
Initially valid for 5 years. Revalidation is required through Form 10AB.
No, only registered trusts under 12A can claim exemption under Section 11 and 12.
It helps trusts save tax on surplus income and enhances eligibility for grants and CSR funds.
It typically takes 1 to 2 months after proper submission of documents and verification.
Yes, the status can be tracked on the Income Tax portal using your login credentials.
The trust will be taxed as a regular entity, and an appeal can be filed before the CIT (Exemptions).
Yes, once granted, the registration is valid across India for all operations of the organization.
No, but receiving foreign funds also requires FCRA registration separately from the Ministry of Home Affairs.
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Get Income Tax exemption by registering under Section 12A with Ebizfiling.com for just INR 3,999/- only.
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