Here are the requirements for NGOs to receive tax exemptions under Sections 12A and 80G of the Income Tax Act in India:

For 12A Registration:

Purpose:

 

• Charitable or Religious: The NGO must be established for charitable or religious purposes.

Registration Requirements:

1. Form 10A: The application for registration must be made in Form 10A online through the income tax e-filing portal.

 

2. Documents:
• Self-certified copy of the trust deed, memorandum of association, or rules and regulations.
• Self-certified copy of registration certificate with the relevant Registrar of Societies, Trusts, or under the Companies Act for Section 8 companies.
• Note on activities since inception or last three years if the organization has been in existence for that period.

 

3. Operational History:
• For trusts or institutions established before 1st April 2021, they need to apply before 31st August 2023 to be considered for the exemption from the start of their operations.
• New entities must apply within one month from the end of the month in which they were established or by the end of the month in which they start their activities.

 

4. Compliance:
• The NGO must not have any income which is not exempt under Section 11 or 12.
• The accounts of the organization should be audited if the income exceeds the threshold specified under Section 44AB.

 

Post Registration:

 

• Annual Compliance: NGOs must file Form 10B or 10BB (audit report) along with their tax return each year to maintain the exemption.

 

For 80G Registration:

 

Purpose:

 

• Encourage Donations: Registration under Section 80G allows donors to claim a deduction on their taxable income for the donations made to the NGO.

 

Registration Requirements:

 

1. Form 10AB: The application for approval under Section 80G must be made in Form 10AB online.
2. Documents:
• Similar to 12A, including self-certified copies of incorporation documents and activities report.

 

• Self-certified copy of the existing 12A registration certificate if already obtained.

 

3. Conditions:
• The NGO must not work for the benefit of any particular religious community or caste (this does not apply to religious trusts or institutions).
• The income and property of the NGO should be applied towards its objects and not distributed among its members.

 

4. Operational Standards:
• The organization should not have any income from profits or gains of business unless the business is incidental to the attainment of the objects of the institutions. 
• Maintenance of Records: Proper books of account and other documents should be maintained for verification by the tax authorities.

 

Post Registration:

 

• Renewal: The approval under Section 80G is now for a period of 5 years, after which it needs to be renewed.
• Annual Compliance: Similar to 12A, maintaining transparency through audited accounts and annual returns.

 

Important Notes:

 

• Amendment in 2020: Section 12AB introduced, which means all existing registrations under 12A must reapply for registration under 12AB by specific deadlines to continue enjoying exemptions.
• Transparency: There's an increased focus on transparency, with NGOs needing to explain how donations are used to meet their objectives.

 

Both sections have seen amendments in recent years to tighten compliance and oversight, so NGOs should keep updated with the latest legal requirements or work with tax professionals to ensure they meet all criteria effectively.