Section 12A of Income Tax Act

Updated: 23-01-2024 13:54:13 PM

Under the Income Tax Act, 1961, non-profit entities such as charitable trusts, religious organizations, NGOs which are registered under Section 12A are eligible to claim full exemption from income tax. Hence, it is important for all such NGOs, trusts or organization to get registered under section 12A soon after incorporation.

Benefits of Registering under 12A

• The key benefit is the income tax exemption benefits in lieu of income utilisation i.e. expenditure. For example, all income utilised by a 12A registered entity for charitable/religious purposes will be considered as an application of income i.e. expenditure by the registered entity resulting in reduced taxation burden.
• An organisation registered under section 12A becomes eligible to receive government and various private sector grants.
• Organizations registered under 12A are also eligible for availing benefits under section 80G. However, NGOs have to separately apply for 80G registration.

Eligibility for 12A Registration

Under existing rules, trusts, societies and other section 8 companies that are formed to provide benefits to the public such as Charitable Trusts, Religious Trusts, Welfare Societies, etc. are eligible for 12A registration. As of yet, the benefit of 12A registration is not applicable to private or family trusts.

How to Apply for Section 12A Registration Online

In order to obtain registration under Section 12A, the eligible organization must file Form 10A. Form 10A can be filed online if the applicant has digital signatures. If you are not required to own digital signature to file your income tax return online, you can file Form 10A electronically through electronic verification code. The application for Section 12A registration is officially filed with the jurisdictional Commissioner of Income Tax.  

Documents Required for Registration under Section 12A

Apart from a completely filled out Form 10A, you must also submit certain key documents while filing for Section 12A registration. The following are key documents that should be furnished while filing Form 10A:  

• A self-certified copy of the instrument creating the trust or establishing the institution (for a trust that has already been created or an institution that has already been established using instruments)

• A self-certified copy of the document evidencing the creation of the trust or establishment of the institution (for a trust that has been created or an institution that has been established using a document other than an instrument)

• A self-certified copy of registration with Registrar of Companies (RoC) or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be

• A self-certified copy of the documents evidencing adoption or modification of the objects, if applicable
• Self-certified copies of the annual accounts of the trust or institution relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made). This is required if the trust or institution has been in existence during any year or years prior to the financial year in which the application for registration under Section 12A has been made

• A note listing the activities of the trust or institution

• Self-certified copy of existing order granting registration under section 12A or section 12AA, as applicable

• Self-certified copy of the order of rejection of an application for grant of registration under section 12A or section 12AA, if applicable

Procedure to File Form 10A Online on E-Filing Portal

• Log on to the E-filing portal of the Income Tax Department
• Click on ‘Submit Returns/Forms’ option shown in the left-hand bar of the page.
  
• Log in to your account using your user id and password and click on the ‘e-file’ option and select ‘Income Tax Forms’ option shown in the drop-down menu.
  
• Select Form 10A option from the “Form Name” field. Also, select the assessment year and the submission mode ‘Prepare and Submit Online’. Click on ‘Continue’.
  
• Please read the instructions carefully before filling out the form and then click on ‘Submit’ to complete the process of Form 10A submission.

Note: It should be noted that submitting Form 10A to the Income Tax Commissioner does not guarantee that the organization will get registered under Section 12A. On receipt of a 12A application, the commissioner shall examine the case and may demand additional documents, if required. The registration will be granted only when the tax commissioner is satisfied with the supporting documents.