12A & 80G REGISTRATIONS
GEN TAX EXEMPTIONS AND ENABLE DONORS TO CLAIM TAX BENEFITS
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12A & 80G REGISTRATIONS
12A and 80G registrations are crucial tax provisions under the Income Tax Act, 1961, offering significant benefits to both NGOs and their donors in India.
12A Registration: Provides NGOs with tax exemption on income utilized for charitable purposes. By eliminating tax liabilities on surplus funds from grants and donations, it helps organizations maximize the resources available for their initiatives.
80G Registration: Incentivizes donations by allowing donors to claim income tax deductions on contributions made to 12A-registered NGOs, effectively reducing their taxable income and encouraging greater philanthropic participation.
Securing these registrations is essential for NGOs to strengthen their financial sustainability, build credibility, and attract increased donor support.
Benefits
Tax Benefits for Donors: Encourages higher contributions by offering donors attractive tax deductions under Section 80G.
Strengthened Credibility: Official recognition under 12A and 80G enhances the NGO’s reputation, fostering greater trust among donors, partners, and stakeholders.
Boosted Fundraising Potential: Tax incentives make donations more appealing, helping NGOs attract a wider base of individual and corporate supporters.
Access to Government Grants: Enables NGOs to qualify for government funding opportunities and participate in various development programs.
Long-Term Financial Sustainability: Facilitates the development of lasting donor relationships, ensuring consistent funding for ongoing and future projects.
Optimized Resource Utilization: Promotes responsible financial management, ensuring that all funds are used efficiently and transparently for approved charitable purposes.
Eligibility Criteria forr 12A & 80G Registration
12A Registration
Applicable to trusts, societies, and Section 8 companies engaged in charitable or religious activities, as defined under Section 2(15) of the Income Tax Act.
Eligible activities include poverty alleviation, education, medical relief, and environmental conservation, carried out without profit motives.
Requires proof of registration as a trust, society, or Section 8 company.
Income and assets must be exclusively used for charitable or religious objectives.
Organizations must maintain proper financial records and timely file annual income tax returns.
Political activities are strictly prohibited.
80G Registration
Available to non-profit entities registered as trusts, societies, or Section 8 companies operating for charitable purposes.
Prior 12A registration is mandatory before applying for 80G benefits.
Donations must be utilized solely for charitable objectives.
Benefits and services must be accessible to all sections of society, without discrimination based on caste, creed, or community.
Transparent financial management through proper record-keeping is essential.
Religious trusts are eligible only if their activities serve the broader public interest and not specific religious communities.
Commercial activities must be incidental and should not exceed 20% of the total receipts.
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