Mandatory Re-Registration Under Section 12A and 80G of Income Tax Act by Existing NGO before 30.06.2021 -FAQ’s

Dear friends, NGOs are an integral part of our Society. There are many NGOs in India like The Earth Saviours Foundation, The Akshaya Patra Foundation, Iskcon, etc which are providing food and shelter to the needy peoples. To support these NGOs, the Government of India has provided many Tax exemptions to these NGOs, so that their income/surplus is exempt from income tax. Further, under Section 80G the donor is allowed to get deduction under Chapter -VIA. Earlier these exemptions are allowed for limited period of 5 years but to reduce compliance burden on NGO, these exemptions are allowed for unlimited period except when they are specifically withdrawn by income tax department.

As these is no renewal process after receiving exemption certificate from Income tax Department, some NGOs are mis utilizing these exemptions. To curb this practice, now from 01.04.2021, amendments are being made under Section 12A and Section 80G of Income Tax Act 1961. According to which all existing NGOs are required to re-register under both sections again within 3 Months (i.e before 30 June 2021). If they fail to re-register within specified time period then they are not allowed to take exemptions and they have to pay tax on income/surplus.

Amendments under these sections are made by The Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act 2020 w.e.f 01.04.2021. According to Section 12A (1) (ac) (i) where the trust or institution is registered under section 12A [as it stood immediately before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] or under section 12AA [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (12 of 2020)], within three months from the 1st day of April, 2021.

Further, as per Income-tax (6th Amendment) Rules, 2021 notified on 26th March 2021, a common Form known as Form 10A has been prescribed for Re-registration under Section 12A and 80G. Form is common but while applying for registration, we have to submit 2 applications separately because only 1 application is allowed to submit at one time.

After receipt of re-registration application, the Principal Commissioner or commissioner, after verifying the records and if satisfied then pass an order in writing registering the NGO for a period of 5 Years.

Query – If have applied for first Time registration under Section 12A on 30th March 2021, whether I have to apply again for registration?

As per Section 12AB (2) All applications, pending before the Principal Commissioner or Commissioner on which no order has been passed under clause (b) of sub-section (1) of section 12AA before the date on which this section has come into force, shall be deemed to be applications made under sub-clause (vi) of clause (ac) of sub-section (1) of section 12A on that date.

In my opinion, no need to apply again. Your application filed on 30th March 2021 is sufficient.

Query – Our NGO got registered under Section 12A and 80G of Income Tax Act, 1961 on 25th March 2021, whether we are required to re-register?

Yes, you have to apply again before 30th June 2021

Query – If any NGO get registered under new scheme and get approval for 5 years, whether this approval can be withdrawn before the period of 5 years?

Yes, the approval can be withdrawn after affording a reasonable opportunity of being heard to NGO.

Similarly, Clauses (viii) and (ix) has been inserted after clause (vii) of sub-section (5) of section 80G by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, w.e.f. 1-4-2021:

According to proviso to clause (ix) where the institution or fund is approved under clause (vi) (as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020), within three months from the 1st day of April, 2021;

On receipt of application, the Principal Commissioner or commissioner, pass an order in writing grating approval for a period of 5 years

Query – Our NGO get approved under Section 80G of Income Tax Act, 1961 and a donor has donated Rs.5100/- to our NGO in cash, whether deduction U/s 80G is allowed to Donor?

No deduction shall be allowed under section 80G in respect of donation of any sum exceeding two thousand rupees unless such sum is paid by any mode other than cash.

Note: All registration application must be filed with adequate care to avoid any hassle at later stage.

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This article is for the purpose of information and shall not be treated as solicitation in any manner and for any other purpose whatsoever. It shall not be used as legal opinion and not to be used for rendering any professional advice. This article is written on the basis of author’s person experience and provision applicable as on date of writing of this article. Adequate attention has been given to avoid any clerical/arithmetical error, however; if it still persists kindly intimate us to avoid such error for the benefits of others readers.

The Author can be reached at mail –[email protected] and Mobile/Whatsapp – 9911303737/ 9716118384

Author Bio

Qualification: CA in Practice
Company: Shiv Kumar Sharma & Associates
Location: Delhi, Delhi, India
Member Since: 03 Dec 2018 | Total Posts: 69
My Self CA. Shiv Kumar Sharma. I am a member of "The Institute of Chartered Accountants of India" since 2012. I have Qualified my B.Com (H) in 2010 And Cleared CS- Executive Exam in June 2013. Currently, I am in Practice and dealing in Direct and Indirect taxation along with ROC Compliances. View Full Profile

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