An NGO can use an exemption from income tax by registering itself and following certain other formalities, but the registration does not help those who make donations. The 1961 Income Tax Act includes several clauses granting "donors" tax incentives. The advantages of these clauses should be used by all NGOs to recruit prospective donors. Most of these sections is Section 80G. When an NGO gets declared under section 80g, a 50 per cent deduction on its taxable income is given to the individual or the organisation making a contribution to the NGO.
If a ngo is registered inferior to 12A and 80g, only government financing is available. A newly registered ngo may require a registration of 80g as well. Section 12a and 80g are a very high relief. The following documents are required for 80g registration. If it is registered under section 12a NGOs do not have to pay tax for the whole life. Moreover, businesses and ministries tend to donate to individuals with registration of 12a and 80g. In so doing, 50 percent of the contribution is withheld from its taxes. The website of an NGO, which talks about the profile of the NGO, activates it its members' past, address and social work, is important today in this growing world of IT. Their balances, yearly records, accounts, accounts, bills, coupons, pictures should be stored as documentation of their social activities.
In specific during the FCRA inquiry by the IB officers or during the inspection by government officials relevant to government funds or other corporate social responsibility officials.
12A
and 80G Registration procedure typically need to be done by an NGO immediately
after its incorporation.
80G
Certificate is issued to a non-profit organization or non-governmental
organizations (NGO), a charitable trust or a Section 8 Company by the Income
Tax Department. The objective behind the 80G certificate is to encourage more
and more donors to donate funds to such organizations. The benefit that the
donor avails by donating to such an NGO is that he gets tax exemption on 50% of
his donation as the donor is allowed to deduct their donations from their Gross
Total Income. To avail the tax exemption, the donor needs to attach the
stamped receipt against the donation that is issued by the NGO – the receipt
needs to include the name, date, and PAN of the organization.
Now that we have covered 80G Registration we will discuss 12A registration and 12A registration process.
By
virtue of 12A registration, Trusts and NGOs and other Section 8 companies enjoy
exemption from paying income tax. NGOs are basically organizations that are
meant for charitable and non-profit activities. However, they do have income
and would be required to pay tax as per normal rates if not registered under
section 12A of the Income Tax Act. The Section 12A of the IT Act, 1962 does not
differentiate between charitable and religious Trusts. Hence 12A registration
is applicable to both the kinds of organizations.
The application needs
to be done using Form 10A, as per Rule 17A of the Income Tax Act, 1962. The
application needs to be filed with the Jurisdictional Commissioner of Income
Tax (Exemptions).
Once the Form and the
documents have been received, the Commissioner verifies the authenticity of the
activities of the organization. He can call for additional documents and
information as deemed fit.
On the satisfactory
report, he will pass an order in writing for grant of 12A Registration. In case
the Commissioner is not satisfied he will reject the application after which
the applicant is given a fair chance to be heard.
12A
Registration can be canceled at any point in time subject to proof that the
activities of the organization being carried out is against the object of the
institution or are not genuine or is benefitting a particular religion or caste
or the funds are being invested in prohibited modes or income of the
institution is being used for the benefit of specific persons.
80G Certificate is issued to only non-profit organization or non-governmental organizations (NGO), a charitable trust or a Section 8 Company by the Income Tax Department. The main objective of 80G certificate is to encourage more donors to donate funds to such organizations. Accordingly, the donor avails by donating to such an NGO is that he gets tax exemption on 50% of his donation as the donor is allowed to deduct their donations from their Gross Total Income.
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