12A and 80G Registration for NGOs: Tax Exemption Guide

What Are 12A and 80G Registrations?

Sections 12A and 80G of the Income Tax Act, 1961 provide tax benefits to charitable and religious organisations (trusts, societies, and Section 8 companies) and their donors respectively:

• Section 12A: Grants income tax exemption to the NGO. Income applied towards charitable purposes is exempt from tax.
• Section 80G: Provides tax deduction to donors who contribute to the NGO. Donors can claim 50% or 100% deduction (depending on the category) on their taxable income.

Without 12A registration, the NGO's income is taxed like a regular entity. Without 80G, donors cannot claim tax deductions on their contributions — significantly reducing the NGO's ability to attract funding.

New Regime (From April 2021)

The Finance Act, 2020 introduced a new regime where all NGOs must apply for registration under the new Section 12AB (replacing 12A/12AA). The process is now entirely online through the Income Tax e-filing portal. Applications are processed by the Commissioner of Income Tax (Exemption) — CIT(E).

Eligibility

• Charitable trusts registered under a state Trust Act or Indian Trusts Act, 1882
• Societies registered under the Societies Registration Act, 1860
• Section 8 Companies (non-profit companies under Companies Act, 2013)
• Religious trusts (with charitable activities)

The organisation must have genuinely charitable objects — education, healthcare, poverty relief, environmental protection, social welfare, etc.

Benefits of 12A Registration

• NGO's income (applied to charitable purposes) is exempt from income tax
• Corpus donations (with specific direction from donor) are fully exempt
• Surplus can be accumulated up to 15% and carried forward for 5 years
• Government grants and donations are not taxable

Benefits of 80G Registration

• Donors (individuals and companies) can claim tax deduction for donations
• Increases the NGO's credibility and ability to attract CSR funding
• 100% deduction for certain categories (Prime Minister's Fund, etc.)
• 50% deduction with 10% of gross total income limit (for most NGOs)

Application Process

For New NGOs (Provisional Registration)

1. Register the NGO (Trust/Society/Section 8 Company)
2. Login to the Income Tax e-filing portal (incometax.gov.in)
3. Go to Income Tax Forms > Form 10A
4. Fill the form with NGO details, objectives, registration documents
5. Upload: Trust Deed / MOA, Registration Certificate, PAN of the organisation
6. Submit with DSC of authorised person
7. CIT(E) processes the application and issues Provisional Registration (URN) — usually within 1 month

For Regular Registration (After 3 Years)

1. At least 6 months before expiry of provisional registration, file Form 10AB
2. Provide audited financial statements for the years of operation
3. Show evidence of charitable activities conducted
4. CIT(E) may call for documents or conduct inquiry
5. If satisfied, CIT(E) issues Regular Registration valid for 5 years

Documents Required

• Trust Deed (for trusts) / MOA and Rules (for societies) / MOA and AOA (for Section 8 companies)
• Registration Certificate from the registering authority
• PAN card of the organisation
• Aadhaar of the authorised signatory
• Audited financial statements (for regular registration)
• Activity report — list of charitable activities conducted, beneficiaries served
• Board/governing body resolution authorising the application

Compliance After Registration

• Annual ITR Filing: File ITR-7 every year (even if income is nil)
• Audit: Mandatory audit under Section 12A if total income exceeds ₹2.5 lakh (before exemption)
• Application of Income: At least 85% of income must be applied towards charitable purposes in the same year
• Accumulation: Up to 15% can be accumulated, but must be applied within 5 years
• Investment Restrictions: Funds must be invested in prescribed securities/modes (Section 11(5))
• Anonymous Donations: Taxed at 30% (unless for religious purposes)
• Renewal: Apply for renewal (Form 10AB) at least 6 months before expiry

How The Ledger Company Can Help

The Ledger Company specialises in NGO registrations and compliance. We handle 12A, 80G, and FCRA registration applications — from document preparation and form filing to follow-up with CIT(E). We also manage ongoing compliance including ITR-7 filing, audits, and renewal applications. Book a free consultation for your NGO registration.