Trust, Society and Section 8 Company can seek registration Under Section 12A of Income Tax Act to claim exemption under Income Tax Act’ 1961, if certain conditions are satisfied. Section 12A deals with registration of trust and Section 12AA deals with online procedure for registration of trust.
A Non Governmental Organization (NGO) that is neither a part of a government nor a conventional for-profit business. Usually set up by ordinary citizens, NGOs may be funded by governments, foundations, businesses, or private persons. NGOs are highly diverse groups of organizations engaged in a wide range of activities, and take different forms in different parts of the world. Some may have charitable status, while others may be registered for tax exemption based on recognition of social purposes. Others may be fronts for political, religious or other interest groups.
New Compliances introduced in Budget 2020 for Section 12A and 80G
According to the new Compliance with regards to section 12A and section 12AA, All NGOs presently having exemption u/s 12AA of the IT Act shall have to reapply for the same by Dec 31, 2020. and shall have to obtain new registration u/s 12AB.
Latest Update
The new compliances under the mentioned Sections i.e under Section 10(23C), 12AB, 35(1)(ii)/(iia)/(iii) and 80G of the Income Tax were to be completed till 31st August, 2020 which was extended till 31st December 2020. Then again the same scheme was extended to 01.04.2021 and 30th June 2021 and 31st August respectively.
Now looking in to the current situation the CBDT has again extended the due date for the application under Section 10(23C), 12AB, 35(1)(ii)/(iia)/(iii) and 80G of the Act in Form No. 10A/ Form No.10AB, for registration/ provisional registration/ intimation/ approval/ provisional approval of Trusts/ Institutions/ Research Associations etc. has been extended till 31st March, 2022 and hence now all existing trust have to re-register themselves on or before 31.03.2022.
Difference between Section 12AA of Income Tax Act and newly introduced Section 12AB
Section 12 AA
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Section 12AB
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What NGOs are required to do?
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The benefits of section 80G was available to all the NGOs registered under Section 12AA for the exemptions in the donations recieved by the NGOs. These benefits were available on a continuous basis.
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Already registered NGOs u/s 12AA will have to reapply for the same and shall have to obtain new registration u/s 12AB.
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The NGOs are required to reapply before 31st Decmeber, 2020 and get new registration u/s 12AA.
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Exemptions are valid for Lifetime.
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Already exempted NGOs will have a 5 year validity. While the new registrations will be provided with 3 years provisional registration.
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NGOs shall have to provide evidence to and convince Income Tax authorities of the bonafides of their activities every 5 years (3 years in case of New registrations), in order to retain their tax exemption.
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Details required only for overseas contributions/ donations.
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Donor-wise details to be maintained and all donors will have to be given a certificate.
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NGOs will have to maintain Administrative records.
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80G benefits available to donors for exempt NGOs on a stable basis.
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80G donations now exposed to uncertainty.
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In India, the various privileges are available to NGO/Charitable Trust’s in the context of tax exemption. Now to avail the benefits of tax exemptions the NGO/ charitable trust has to register themselves with income tax under section 12A , Section 12AA & Section 80G of the Income Tax Act, 1961.
Also Read: Registration under Section 80G(5)
Benefits of Section 12A & 12AA registration:
- Income will be exempted from taxation.
- Benefits in taking grants from government / abroad / other agencies.
- Benefits in FCRA registration.
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