12A Registration
| Market Price: | ₹ 6000 |
|---|---|
| Foundry Price: | ₹5000 excl. GST |
| ₹5900 incl. GST | |
| You Save: | ₹ 1000 (16.666666666667%) |
One-time registration to trusts and other non for profit organisations for exempted from the payment of income tax
About this item
- 12A Registration Filing
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12A registration is a one-time registration which is granted by the Income Tax Department to trusts and other not for profit organisations. The purpose of the registration is to be exempted from the payment of income tax. 12A registration is generally applied for immediately after incorporation.
Section 8 Companies, Trusts and NGOs which have obtained 12A registration enjoy exemption from paying income tax on their surplus income. The 12A registration facility is available for all non-profit entities. Hence, it is necessary for all Trusts, NGOs and other Not-for-Profit organisations to be aware of Section 12A of the Income Tax Act.
The purpose of the present article is to discuss the procedure for obtaining 12A registration.
Benefits of 12A Registration
The benefits of Section 12A Registration are the following:
- The fund used for charitable or religious purposes is considered to be the application of the income. The income application refers to the expenses used for charitable or religious purposes for calculating the taxable income of the not-for-profit organisation.
- The income received will be free from the charge of Income Tax.
- The person who is registered under Section 12A can avail benefits for accumulating or setting aside income. However, the income which is set aside should not be more than 15% of the amount applied towards charitable or other non-commercial purposes.
- The accumulation of income which is considered to be the income application shall not be included in the assessee’s total income.
- NGOs are entitled to receive grants as funds from domestic and international sources. These agencies are entitled to provide grants to NGOs which have obtained registration under this section.
- The registration which is granted under Section 12A shall be treated as a one-time registration. Once the registration is made, the registration will be active until the date of cancellation.
- There is no requirement to renew the registration periodically. Hence, the registration benefits can be claimed NGO as and when the requirement arises.
Documents Required for 12A Registration
- A self-certified copy of the instrument which was used to create the trust or establish the institution shall be submitted.
- The institution or trust may have been created otherwise than by way of drafting and registering an instrument. In such cases, a self-certified copy of the document evidencing the creation of the trust, or establishment of the institution should be submitted to the Income Tax Department.
- It is necessary to submit a self-certified copy of the registration, which was made with the applicable body. The applicable body may be the Registrar of Companies, the Registrar of Firms and Societies or Registrar of Public Trusts.
- A self-certified copy of the documents which provide evidence for adoption or modification of the objectives of the entity shall be submitted.
- Annual financial statements for three preceding financial years
- Note on the activities conducted by the entity
- In certain cases, the Income Tax department may cancel the registration granted under this section. After rectifying the default, the assessee is allowed to make a subsequent application. In such cases, it is necessary to submit a self-certified copy of the existing order granting registration.
- The assessee may have previously applied for registration under this section. The application may have been rejected. In such cases, a self-certified copy of the order of rejection should be attached with the application.
