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The purpose of 12AA registration is to obtain income tax exemption. Once this registration is complete, the organization's entire income is exempt from taxation. To complete the application for 12AA registration, Form 10A is used. The officer in charge of processing applications for registration under section 12AA is the Commissioner of Income Tax Department, who has jurisdiction over the institution. All NGOs are eligible for income tax exemptions, but only those who are aware of them can take benefits of 12AA registration. Therefore, all NGOs, Trusts, and other Not-for-Profit organizations must be aware of Section 12AA of the Income Tax Act in order to consider the benefit of the exemption limit.
Form 10A must be filed by organizations that want to register under Section 12AA. Applications for Section 12AA registration are accepted from entities such as Societies, Charitable Trusts, Religious Trusts, and Section 8 Companies. The 12AA registration process and Form 10A filing are now done online, and they are only accessible with the signatory's digital signature.
There are many sections in the Income Tax Act that are applicable to charitable and religious trusts and institutions. These include:
An applicant must submit the following documents attached with Form 10A for 12AA registration:
The 12 AA registration process involves the following steps:
How to File Form 10A on the New E-Filing Portal?
Applicants can now file form 10A on the online portal as well. Below are the steps involved in filing Form 10 A online:
When a Trust, Establishment or an NGO is registered under Section 12AA(1)(b) or has acquired registration whenever under Section 12A as it remained before the correction by the Finance (No. 2) Act, 1996, either the Principal Commissioner or the Commissioner of Income-tax can cancel the registration under the accompanying two sub-sections:
The Commissioner or Principal Commissioner of Income Tax, when providing reasonable chance of being heard to the trust or foundation in question, may pass a request under Section 12AA(3) in written to cancel the registration under the accompanying two conditions:
To defend the provisions related to cancellation of registration of a trust/NGO, section 12AA(4) was enacted to give that where a trust or a foundation has been conceded enrollment, and where section 13(1) is applicable as its activities are being done in such a way, that
However registration will not be canceled under Section 12AA(4) if such in cases where trust or foundation proves that there was a genuine reason to conduct the above mentioned activities.
The government has updated some new changes in section 12AA. We will look at what the changes are:
Ans: You can register a trust under section 12A of the income tax act by filing an application on the income tax website.
Ans: Yes, you can apply for both applications together. In case you want to apply separately, apply for section 12AA registration first. It is compulsory to obtain a 12AA certificate for registration under 80G of the income tax act.
Ans.: 12 AA registration refers to the registration under Section 12AA of the Income Tax Act, which grants tax exemption to charitable trusts, religious organizations and organizations doing social work.
Ans: Any charitable trust, society, or section 8 company engaged in genuine charitable activities and/or religious activities is eligible for 12 AA registration.
Ans: To apply for exemption under Section 12 AA, you need to submit the application via Form 10A to the Income Tax Department, attached with all necessary documents and details of activities.
Ans: Documents needed for 12AA registration include trust deed, memorandum of association, articles of association, PAN, and details of trustees or members.
Ans: Section 12 AA registration has several benefits for eligible organizations. It provides tax benefits to donors, promotes philanthropy by individuals and corporations alike, and also exempts the organization from income tax liabilities.
Ans: Processing time of 12 AA registration varies depending upon the nature and work of organization and format of application filed, but it generally takes a few months. Regular follow-ups can accelerate the process.
Ans: Yes, those foreign organizations who are engaged in charitable activities in India are also eligible to apply for 12 AA registration.
Ans: Some major benefits of 12 AA registration include- Tax exemption on income, eligibility for grants, and increased credibility in the eyes of donors and stakeholders.
Ans: For organizations registered under section 12AA, certain profit-generating activities are restricted. Such organizations who are exempted must primarily focus on charitable activities.
Ans: No 12 AA registration is not mandatory, but it is advised that non-profit organizations avail 12 AA registration for tax benefits.
Ans: The status of 12AA registration can be checked online on the official website of the Income Tax Department.
Ans: Yes, if an organization gets involved in other activities which are not part of its mandate or it diverts from its prescribed objectives it can lose its registration.
Ans: 12 AA allows tax exemption to the organizations involved in charitable work whereas 80G allows donors to claim tax deductions for their contributions.
Ans: Yes, any and all Trust, Society and Section 8 Company are qualified to apply for 12 AA registration.
Ans: No, once the registration is granted under 12AA, it is generally valid unless revoked by the Income Tax Department.
Ans: No, organizations registered with Section 12AA enjoy tax exemption on their income.
Ans: The role of Income Tax Department involves review of applications, checking compliance requirements, and grants 12AA registration based on the organization's activities.
Ans: Yes if their 12AA registration application is rejected, organizations have the option to appeal to the Commissioner of Income Tax (Exemptions).