Registration of an organization under the Clause 12A of Indian Income Tax Act 1961 is required for preventing its income from deduction by the Department of Income Tax.
12A Registration means Income of the society shall not be taxable. This is one time registration. When NGO organization gets registered with Income Tax department, to claim tax exemption for their income, it gets the 12A certification.
Conditions as to registration of NGOs -
The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:-
(a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later and such trust or institution is registered under section 12A:
Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of section 11 and section 12 shall apply in relation to the income of such trust or institution -
(i) from the date of the creation of the trust or the establishment of the institution if the Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons;
(ii) from the 1st day of the financial year in which the application is made, if the Commissioner is not so satisfied;
(b) where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section 11 and section 12 exceeds fifty thousand rupees in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.
INCOME TAX EXEMPTION FOR NGOs -
Under section 11(1)(a) to (c), income derived from property held under trust is exempt if the following conditions are satisfied:
a) The property should be held under trust wholly for charitable or religious purposes.
b) Income from such property should be applied to charitable or religious purposes. (Exemption is available to the extent of such application)
c) Income should be applied in India
d) At least 85% of the income derived from property held under trust, should be applied to charitable or religious purposes in the relevant previous year in order to claim full tax exemption.
Under Section 11(4) property held under trust includes a business undertaking held under trust.
Any voluntary contribution received by a trust or institution is exempt if (a) the trust is created wholly for charitable purposes and (b) contribution is not made with a specific direction that it shall form part of the corpus of the trust.
12A Registration Procedure -
The procedure for getting registration under section 12A -
Step-1: Dully filled-in application will be submitted to the Commissioner of Concerning Department.
Step-2: NGO will receive notice for clarifications from Concerning Department in 2-3 months after applying.
Step-3: Reply of notice will be submitted by the consultant (NGO SYSTEM INDIA) along with all relevant desired documents to the Concerning Department.
Step-4: Consultant (NGO SYSTEM INDIA) will personally visit the Concerning Department to follow-up the case on behalf of the applicant organization.
Step-5: 12A Certificate will be issued.
12A Registration is must for various Government & PSU Projects & Funding.
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