If you are a founder, manager of an NGO and wants to increase flow of donations into your NGO, then this article is for you. It casts a light upon why an NGO must go for registration under Section 12A and 80G of the Income Tax Act.

There are certain benefits available for the NGOs who get themselves registered under the said sections of Income Tax Act. Doesn’t matter whether you run your NGO in the form of Society, Trust or Section 8 Company. First you have to seek registration under Section 12A which will make you eligible for getting registration under Section 80G.

Noteworthy benefits of this registration are as follows:

  1. It enables the donors to get tax exemption upto 50% of the donations made to your NGO. Consequently, both their taxable income and tax payable gets reduced. Without this registration for your NGO in India,your donation receipts would be entitled to be taxed at normal tax rates and the donors wont be able to avail exemptions available.
  2. Section 12A and 80G Registration would make your NGO a promising organization since it is now recognised by Government of India. Also, this registration serves a legitimate proof of existence and purpose of your NGO which ultimately would enhance the confidence of everyone associated with it.
  3. If you want to avail Government funding, then this registration is must without which you would be devoid of receiving Government funding.
  4. For getting foreign donations as well, you need to get your NGO this registration.

Therefore, NGO’s should avail the advantage of these provisions to attract potential donors

Eligibility for availing this registration:

  1. The NGO must maintain a clear account of donations received and spent.
  2. Other than the charitable cause, the organisation or its byelaws should not represent any other cause. None of the donations can be spent toward anything but the charitable cause.
  3. The organisation shall not be able to apply for 80G if it supports particular religion, caste or creed based activities.
  4. The organisation should be formed as Society, Trust or Section 8 Company under the Companies Act, 2013.

Documents Required:

  1. Copy of Registration Certificate
  2. Copy of Trust Deed / Bylaws / Memorandum of Association & articles of Association
  3. Copy of Pan Card of NGO
  4. Registered Office Proof: Copy of Electricity Bill / House Tax Receipt / Water Bill
  5. NOC from Landlord (where registered office is situated);
  6. Evidence of welfare activities carried out & Progress Report since inception or last 3 years
  7. Books of Accounts, Balance Sheet & Income Tax Return (if any), since inception or last 3years
  8. List of governing body / board of trustees members with their Address, contact details
  9. Copy of PAN Card of governing body/ board of trustees members
  10. List of donors along with their address and PAN
  11. Original Registration certificate, MOA /Trust Deed/Bye-laws of Society for verification
  12. Any other document or affidavit/undertaking, if extra information is by the income tax department.

(The author of this article is a Practicing Company Secretary located at New Delhi and can be reached at ankitasinglaandassociates@gmail.com)

Disclaimer: The contents of this article are solely for informational purpose. It does not constitute professional advice or a formal recommendation.

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