Introduction:
India is a nation with a vibrant culture of generosity and charity. By helping the poor and advancing social welfare, charitable organisations play a key part in the growth of society. The Indian government has established a number of tax incentives and exemptions, such as 12A and 80G registration, in order to support these groups.
What is registration under 12A?
According to the Income Tax Act of 1961, a 12A registration is a document that grants tax exemption to charity organisations. Any organisation wishing to claim tax advantages on its income must obtain the certificate, which is given by the Income Tax Department.
An organisation becomes eligible for certain tax exemptions, including the exemption from paying income tax on its income, after it receives 12A registration.
Eligibility for 12A registration, an organization must meet the following criteria:
- The organization must be registered as a trust or a society under the relevant laws in India.
- The organization must have a valid PAN (Permanent Account Number) card.
- The organization must have a bank account in its name. The organization must be engaged in activities that are of charitable nature, such as relief of the poor, education, medical relief, or any other activity that benefits society.
Procedure for obtaining 12A registration:
The following is the procedure for obtaining 12A registration:
- The organization must apply to the Commissioner of Income Tax in Form 10A along with the necessary documents.
- The Commissioner of Income Tax will examine the application and may ask for additional information or documents.
- Once the application is approved, the organization will be issued a 12A registration certificate.
Benefits of 12A registration:
The following are the benefits of 12A registration:
Tax exemption on income
Charitable organizations that have obtained 12A registration are exempted from paying income tax on their income.
Eligibility for government funding
Charitable organizations that have obtained 12A registration are eligible to receive funding from the government and other agencies.
Credibility
12A registration provides credibility to the organization and helps in building trust among donors and stakeholders.
What is 80G registration?
80G registration is a certificate that provides tax benefits to donors who donate to charitable organizations. The certificate is issued by the Income Tax Department and is mandatory for any organization that wants to claim tax benefits on its donations. Once an organization obtains 80G registration, it becomes eligible for various tax exemptions, including exemption from paying income tax on its donations.
Eligibility for 80G registration:
To be eligible for 80G registration, an organization must meet the following criteria:
- The organization must be registered under section 12A of the Income Tax Act.
- The organization must be engaged in activities that are of charitable nature, such as relief of the poor, education, medical relief, or any other activity that benefits society.
Procedure for obtaining 80G registration:
The following is the procedure for obtaining 80G registration:
- The organization must apply to the Commissioner of Income Tax in Form 10G along with the necessary documents.
- The Commissioner of Income Tax will examine the application and may ask for additional information or documents.
- Once the application is approved, the organization will be issued an 80G registration certificate.
Benefits of 80G registration:
The following are the benefits of 80G registration:
Tax benefits to donors
Donors who donate to charitable organizations that have obtained 80G registration are eligible for tax benefits under the Income Tax Act.
Increased donations
80G registration provides credibility
to the organization and helps in increasing donations from individuals and corporate entities.
Eligibility for foreign funding
Charitable organizations that have obtained 80G registration are eligible to receive funding from foreign sources.
Difference between 12A and 80G registration:
While both 12A and 80G registration provide tax benefits to charitable organizations, there are some differences between the two:
12A registration provides tax exemption to the organization on its income, while 80G registration provides tax benefits to donors on their donations.
12A registration is mandatory for charitable organizations to claim tax benefits on their income, while 80G registration is optional and can be obtained by organizations to provide tax benefits to their donors.
12A registration is valid for perpetuity, while 80G registration has to be renewed every year.
Conclusion:
In conclusion, 12A and 80G registration are important certificates that provide tax benefits to charitable organizations in India. While 12A registration is mandatory for organizations to claim tax benefits on their income, 80G registration is optional and can be obtained by organizations to provide tax benefits to their donors. Both certificates provide credibility to the organization and help in increasing donations from individuals and corporate entities. Charitable organizations must ensure that they meet the eligibility criteria and follow the procedure for obtaining these certificates to avail the tax benefits and contribute towards the development of society.
