12A Registration for NGO’s: Eligibility, Process, Documents and Procedures.

What is 12A Registration?

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 can be applied immediately after incorporation.

Section 8 Companies, Trusts, Society and NGOs which have obtained 12A registration can enjoy exemption i.e under section 11 and 12 of the Income Tax Act, 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 Section 8, Trusts, Society and NGOs to be aware of Section 12A of the Income Tax Act. The purpose of the present article is to discuss the Eligibility, Documents and Procedure for obtaining 12A registration.

Eligibility for 12A Registration:

• In order to qualify for registration under Section 12A, the organisation should meet the definition of charitable purpose as defined in the Income Tax Act. Charitable purpose means relief to the poor, education, medical relief and activities undertaken with the objective of preserving the environment. The pursuit of any other objective of a public utility will also qualify for a charitable purpose.
• Charitable Trusts, Religious Trusts, Societies and Section 8 Companies claiming exemption under Section 11 ( Section 11 deals with the exemption of income from property held in trust or other legal obligation for religious or charitable purposes wholly or in part) and Section 12(Section 12 deals with exemption of income derived by such a trust from voluntary contributions.) of the Income Tax Act, can obtain 12A registration.
• The primary qualifying criterion will be to check whether there is any profit motive involved in the activities carried on by the assessee. In the absence of a profit motive, registration shall be granted.
• If the assessee is carrying on activities related to trade or commerce, then the facility granted under this section is restricted.
• Also, it may be noted that 12A Registration is not applicable for Private or Family Trusts. The activities of the assessee should be genuinely for the benefit of the public.

Documents required for Registration u/s 12A:

To obtain registration under Section 12A, an application in Form 10A for registration of a charitable or religious trust or institution can be made. The process for applying for Section 12A registration and the process of Form 10A filing has been made exclusively online. The application of Form 10A shall be addressed to the Commissioner of Income Tax along with the necessary documents.

The following documents are required for registration u/s 12A of the Income Tax Act, 1961:

1. A self-certified copy of the instrument which was used to create the trust or establish the institution shall be submitted.
2. A self-certified copy of Registration Certificate and MOA /Trust Deed.
3. A self-certified copy of the documents which provide evidence for adoption or modification of the objectives of the entity shall be submitted.
4. Annual financial statements for three preceding financial years, if any.
5. Note on the activities conducted by the entity.
6. NOC from Landlord (where registered office is situated).
7. Copy of PAN card.
8. List of contributors along with their address and PAN.
9. List of governing body of trustees with their contact details like Email and Mobile number.
10. 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.
11. 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.

Procedure for Registration u/s 12A:

Once the application is submitted in the prescribed format online, the Commissioner will request the applicant to submit additional information or documents, as he deems fit. The request for additional information or documents would be to satisfy the Commissioner as to the genuineness of the activities of the Trust or Institution. If the Commissioner is satisfied with the application, then he/she will pass an order in writing registering the Trust or Institution under 12A of the Income Tax Act.

In case the Commissioner is not satisfied with the application, then he/she can also pass an order in writing refusing to register the Trust or Institution.

Order granting or refusing registration shall be passed before the expiry of six months from the end of month in which application was received under section 12A.

The process of registration may take time upto 3 or 4 months.