For Indian NGOs, charities, and nonprofit trusts, being fiscally sustainable is as synonymous as fulfilling their social missions. Among the most reliable means of fulfilling the purpose of being tax-exempt and enlisting donors is registration under Section 12AB and Section 80G of the Income Tax Act, 1961. Such registrations are not technicalities of law — they hugely enhance the credibility, transparency, and financial health of an NGO as well as make an NGO eligible for tax benefits and sponsorships from corporations or governments.
Here is an extensive guide detailing everything there is to 80G and 12AB registration, from their significance to who can apply, necessary documents, process, fees, and how Legal N Tax can help you register efficiently.
What is Section 12AB Registration?
Registration under Section 12AB is granted to charitable institutions such as Trusts, Societies, and Section 8 Companies. It enables them to claim exemption from tax under Sections 11 and 12 of the Income Tax Act, as they comply with several conditions.
Earlier, Section 12A or 12AA registration was permissible, but from 1st Apr 2021 onwards (because of Finance Act 2020), all old and new NGOs must receive registration under Section 12AB.
Significance of Section 12AB Registration
- Income Tax Exemption: Necessary to enjoy exemption under Sections 11 and 12 of the Income Tax Act.
- Eligibility for Government and CSR Grants: Required for applying to government schemes and receiving corporate donations under CSR.
- Proof of Charitable Status: Offers legitimacy in the minds of donors, regulators, and supporters of CSR.
- Concurrent Filing under 80G: Organizations have the option of filing for 12AB and 80G together using Form 10A.
What is 80G Registration?
Registration under 80G allows donors to take deduction for donations made to a registered NGO. Depending upon the nature of the organization and its registration, donors can take deduction of 100% or 50%, respectively, as per prescribed limits under the Act. It encourages corporates and individuals to donate to charities.
Significance of 80G Registration
- Tax Relief for Donors: Section 80G allows for 50% or 100% deduction for donors.
- Higher Trustworthiness: Increases the credibility of the organization and boosts donations.
- Corporate CSR Eligibility: Required for NGOs to be eligible as CSR implementing agencies under the Companies Act.
- Mandatory Annual Reporting: Organizations must file Form 10BD and issue Form 10BE to donors each year.
Eligibility for 80G and 12AB Registration
To be eligible for registration under Section 12AB and approval under 80G, your NGO must:
- Be a legally registered Trust, Society, or Section 8 Company.
- Engage only in charitable purposes as defined in Section 2(15) of the Income Tax Act.
- Ensure no part of income or assets is used for personal benefit; transactions with trustees must be at arm's length.
- Maintain regular books of accounts and financial statements.
- Possess a valid PAN card.
Documents Required for 80G and 12AB Registration
Depending on whether you’re applying for provisional or final registration, you may need:
- PAN Card of the NGO
- Registration Certificate / Incorporation Document
- Trust Deed / MOA & Bylaws
- Identity and address proof of trustees/board members (PAN, Aadhaar)
- Bank statement or utility bill as address proof
- Financial statements (if available for past years)
- Activity Report
- List of donors and receipts (for 80G, if applicable)
80G and 12AB Registration Process
- Document Preparation: Gather and organize all necessary documentation.
- Application Filing: Submit Form 10A for new or provisional registration. For conversion or renewal, submit Form 10AB.
- Online Portal Submission: Upload documents and complete e-verification on the Income Tax Portal.
- Departmental Scrutiny: Respond to any clarifications or notices from the assessing officer.
- Issuance of Registration Certificate: Receive Form 10AC (for provisional) or Form 10AD (for final registration).
Post-2021 Updates You Should Know
- Validity of Registration:
- Provisional Registration: Valid for 3 years.
- Final/Regular Registration: Valid for 5 years, renewable.
- Mandatory Revalidation: All existing registered NGOs were required to revalidate their status under Section 12AB.
- Annual Compliance:
- File Form 10BD annually by 31st May of the following financial year.
- Issue Form 10BE to donors.
- Late filing may attract fees under Section 234G and penalties under Section 271K.
80G and 12AB Registration Fees
No filing fee is required by the government for these applications. Cost of documentation, legal drafting, filing, and follow-up through professional service, however, is typically borne by NGOs. Legal N Tax provides reasonable and transparent prices along with complete filing and advisory service.
Benefits of 80G and 12AB Registration
For NGOs:
- Income Tax Exemption under Sections 11 and 12
- Eligibility for CSR Contributions (with CSR-1 registration)
- Increased credibility and openness
- More Funds Raised from Public and Corporates
For Donors:
- 100% Tax Deduction under Section 80G (subject to conditions)
- Receipt of Form 10BE and automatic reflection under AIS/26AS
- Corporates Compliance on CSR
Note: Foreign donations need separate registration under FCRA (Foreign Contribution Regulation Act) by the NGOs under the Ministry of Home Affairs. 12AB or 80G does not permit foreign funding itself.
Why Legal N Tax for 80G and 12AB Registration?
Legal N Tax knows how time-consuming and technical the entire registration process can become. We give you end-to-end solutions, including:
- Expert Consultation: Ascertaining your eligibility and compliance
- Legal Drafting: Drafting of Trust Deed, MOA, Rules & Bylaws
- Form Filing: Filing of 10A and 10AB forms correctly
- Government Coordination: Timely follow-up processing: Response to notices and status tracking
- Annual Compliance Support: Directions for Forms 10BD/10BE and renewal applications
Conclusion
Getting 80G and 12AB registration is imperative for NGOs that aspire to gain lasting outcomes through financial stability as well as donor confidence. Not only do these registrations provide your organization with exemption from taxes and advantages, but they also wonderfully broaden the lucidity and credibility of your organization.
They put your NGO into the world of CSR, government grants, and continuous donor funding, so that you can focus on your core business of generating social change. You can quickly, professionally, and economically register your Society, Trust, or Section 8 Company for 80G and 12AB with Legal N Tax.
Call us today for your complimentary consultation and receive expert help all the way through your whole 80G and 12AB online registration process!
