Apply Online for 12A Registration

12A Registration, granted by the Income Tax Department, is a one-time registration for trusts and other nonprofit organizations. The primary objective of this Registration is to obtain an exemption from income tax payment. Generally, organizations apply for 12A Registration soon after their incorporation. Nonprofit entities such as Section 8 Companies, Trusts, and NGOs that have obtained 12A Registration are entitled to income tax exemption on their surplus income.

At Global Taxman, we understand the importance of obtaining Section 12A registration for your organization. We offer comprehensive assistance and guidance throughout the registration process to help you unlock the benefits and privileges provided under Section 12A of the Income Tax Act.

Contact Global Taxman today to embark on your journey toward Section 12A registration. Let us handle the complexities while you focus on making a positive impact in society.

Section 12A of Income Tax Act

After establishing a Trust organization or NGO, it is necessary to register under Section 12A of the Income Tax Act to claim exemptions provided by Sections 11 and 12. Section 12A allows nonprofit entities such as Charitable Trusts, Nonprofit Organizations, Welfare Societies, Religious Institutions, etc., to enjoy total tax exemption per the Income Tax Act of 1961 provisions.

If a non-profitable trust or NGO fails to register for form 12A income tax, their financial receipts and transactions will be taxable. It's important to note that private or family trusts are not eligible for such exemptions and cannot obtain 12A Registration.

Benefits of 12A Registration

• Income Application: The funds utilized for charitable or religious purposes are considered the application of income. This means that expenses incurred for such purposes are considered when calculating the nonprofit organization's taxable income.
• Income Tax Exemption: Income received by the organization will be exempt from the charge of Income Tax. This exemption allows the organization to allocate more resources toward its philanthropic endeavors.
• Accumulation of Income: Registered entities can accumulate or set aside income for future use. However, the amount set aside should not exceed 15% of the funds for charitable or non-commercial purposes.
• Exclusion from Total Income: The income that is accumulated and considered as the income application is not included in the assessee's total income. This helps in reducing the tax liability of the organization.
• Access to Grants: NGOs with Section 12A registration are eligible to receive grants from both domestic and international sources. Various agencies and institutions specifically provide grants to NGOs that have obtained Registration under this section.
• One-Time Registration: The Registration granted under Section 12A is treated as a one-time registration. Once registered, the organization remains active until the date of cancellation, eliminating the need for periodic renewal.
• Flexible Benefits: Form 12A income tax Registered NGOs can avail themselves of the registration benefits as and when required, without any rigid renewal process. This flexibility allows organizations to use the benefits based on their needs and circumstances.

Eligible Entity for Section 12A Registration

Section 12A registration is available to various types of entities that meet the eligibility criteria. The following entities are eligible for Section 12A of Income Tax Act registration:

• Trusts: Public charitable trusts, religious trusts, and other types of trusts established for charitable or religious purposes can apply for Registration under Section 12A.
• Institutions: Charitable or religious institutions, including educational institutions, hospitals, medical institutions, and other similar establishments, are eligible for Section 12A registration.
• NGOs (Non-Governmental Organizations): Nonprofit organizations engaged in social welfare, community development, environmental conservation, or other charitable purposes can apply for Registration under Section 12A.
• Societies: Societies registered under the Societies Registration Act of 1860 and engaged in activities of a charitable or religious nature can seek Registration under Section 12A.
• Section 8 Companies: Companies registered under Section 8 of the Companies Act 2013, established for promoting art, science, commerce, sports, education, research, social welfare, or any other charitable objectives, are eligible for Section 12A registration.

Eligibility Criteria under Section 12A

• The organization must meet the "charitable purpose" definition per the Income Tax Act, including relief to the poor, education, medical relief, and activities focused on environmental preservation.
• Objectives related to public utility also qualify as charitable purposes.
• Registration is granted if there is no profit motive behind the organization's activities.
• If the organization engages in trade or commerce, Registration is granted only if trade receipts are less than twenty percent of total receipts.
• Private or Family Trusts are not eligible for 12A Registration.
• The organization's activities must genuinely benefit the public to qualify for Registration.

Filing of Form 10A

Form 10A is an essential form that must be filed by entities intending to register under Section 12A. The application process for Section 12A registration and the filing of Form 10A has been streamlined to be exclusively conducted online. A digital signature is required for authentication to proceed with the online filing. When applying for Registration under Section 12A, it is mandatory to affix the digital signature of the founder or author of the trust.

Validity of Section 12A Registration

Once an organization obtains Section 12A registration, the validity of the Registration is perpetual unless it is cancelled or revoked by the Income Tax Department. Unlike certain registrations requiring periodic renewal, Section 12A of Income Tax Act has no expiration date or a specific time limit.

Documents Required for Registration under Section 12A of the Income Tax Act

• A self-certified copy of the instrument used to create the trust or establish the institution.
• A self-certified copy of the Registration made with the applicable body (Registrar of Companies, Registrar of Firms and Societies, or Registrar of Public Trusts).
• A self-certified copy of the documents provides evidence for adopting or modifying the entity's objectives.
• Annual financial statements for the preceding three financial years.
• A detailed note describing the activities conducted by the entity.

12A Registration Procedure

• Submission of Application: The assessee must apply online with all the necessary details and supporting documents.
• Request for Additional Information: The Commissioner may request additional information or documents.
• Approval and Written Order: If the Commissioner is satisfied, a written order is passed granting Registration under Section 12A.
• The Privilege of Registration: Once registered, the entity enjoys the benefits and exemptions of Section 12A.
• Rejection of Application: If the application is found deficient, it may be rejected, with reasons provided.

Assistance with 12A Registration: How Global taxman Can Help

Global Taxman offers valuable assistance for Section 12A registration, ensuring a smooth and hassle-free process. With a team of experienced professionals, we provide expert guidance every step of the way. From understanding the requirements to preparing the necessary documentation, Global taxman ensures that all the essential aspects of the registration process are handled efficiently. Let us take care of the complexities while you focus on your charitable endeavors.