12A & 80G Registration

What each registration does

• 12A exempts the trust, society or Section 8 company from tax on income applied to its charitable objects
• 80G allows a donor to deduct a portion of their donation, commonly fifty per cent, from taxable income
• Both are granted by the Commissioner of Income Tax (Exemptions)
• Registrations are granted for a fixed period and must be renewed, not obtained once and forgotten
• A provisional registration is available to newly formed organisations yet to begin activity

What the Commissioner examines

The application is not a formality. The Commissioner examines whether the objects are genuinely charitable and whether the activities actually carried on match them.

• Whether the objects fall within the definition of charitable purpose in Section 2(15)
• Whether the deed or memorandum bars distribution of income to members or trustees
• Whether there is a dissolution clause transferring assets to a similar body
• Genuineness of activities, evidenced by accounts, photographs and reports
• Whether any part of the income benefits the founders or related persons

Obligations that follow

• File the income tax return in Form ITR-7 every year, even where income is exempt
• Maintain books of account and have them audited where receipts cross the threshold
• File Form 10BD reporting every donation received, and issue Form 10BE certificates to donors
• Apply at least eighty-five per cent of income to the objects each year, or formally accumulate it
• Apply for renewal before the registration expires

How we handle it

1. 1 Reviewing the constitution We check the objects, the non-distribution clause and the dissolution clause, since defects here are the usual ground for rejection.
2. 2 Assembling the activity record Accounts, activity reports and supporting evidence are compiled to demonstrate the work is genuine.
3. 3 Filing the applications The applications are filed online in the prescribed forms with the complete document set.
4. 4 Responding to queries The Commissioner commonly raises written queries. We draft and file the responses within the time allowed.
5. 5 Orders issued The registration orders are issued, and we explain the compliance that follows so the registration is not lost.

Frequently asked questions