12A Certificate

12A Certificate

Section 12 A of the Income Tax Act, 1961, is a onetime tax exemption provided to trusts, NGOs and Section 8 Companies. Organizations holding a registration under section 12A are exempted from paying taxes on their surplus income.

NGOs are organizations involved in charitable and non-profit activities. However, they do earn income and they are required to pay tax as per normal rates if not registered under section 12A, Income Tax Act.

12A Registrations Requirements

12A registrations apply only to NGOs and Charitable Organizations if they fulfil the following conditions:

♦ They must not have any income generated from a business

♦ They should either be a charitable trust or a registered society

♦ Also, such organizations should not be using their assets or income for any other purpose other than making charity

♦ Furthermore, they must maintain a regular book of accounts in favor of their receipts and expenses.

♦ The trustees or any other body governing the organization should not be involved in deriving any undue benefits from these funds

♦ They should not be working for the benefit of any particular caste or religion

♦ Also, in the case of business-related income, the organization should maintain a separate book of accounts. However, the donations received by the NGO must not be used for such businesses.

NGO must apply For 12A Registration immediately after its Incorporation.

Documents Required for 12A Registration

The following documents are required for 12A registration:

♦ Documental evidence of the creation of the Trust or NGO {Trust Deed of a Trust; Registration Certificate and Memorandum of Association {MOA} of a society}

♦ Section 8 companies need to submit a certificate of incorporation and copies of MoA and AoA of the company

♦ Form 10A & PAN of the organization

♦ Three-year bank account statement of the Trust


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