12A Registration
About the Registration
12A Registration refers to approval granted under Section 12A of the Income Tax Act, 1961, which allows NGOs, Trusts, and Charitable Institutions to claim exemption from income tax on their surplus income. This registration is essential for any non-profit organization that wishes to operate in a financially sustainable and legally compliant manner.
Once an organization obtains 12A Registration, its income used for charitable or social purposes is not taxed, provided it complies with the conditions prescribed under the Income Tax Act. This enables NGOs to utilize their funds fully for achieving their objectives such as education, healthcare, social welfare, relief of the poor, and other charitable activities, without the burden of income tax.
To be eligible for 12A Registration, the organization must be legally registered as a Trust, Society, or Section 8 Company and should work purely on a non-profit basis. The objectives of the organization must be charitable in nature, and its income or assets should not be used for personal benefit of trustees, members, or directors.
After obtaining 12A Registration, the organization is required to maintain proper books of accounts, file annual income tax returns, and comply with statutory requirements regularly. This registration significantly enhances the credibility of the NGO and is often a mandatory prerequisite for obtaining 80G Registration, government grants, CSR funding, and donor support.
In summary, 12A Registration is the foundation for tax exemption and long-term financial sustainability of an NGO. It ensures lawful functioning, promotes transparency, and enables the organization to focus entirely on its charitable mission without tax-related constraints.
Once an organization obtains 12A Registration, its income used for charitable or social purposes is not taxed, provided it complies with the conditions prescribed under the Income Tax Act. This enables NGOs to utilize their funds fully for achieving their objectives such as education, healthcare, social welfare, relief of the poor, and other charitable activities, without the burden of income tax.
To be eligible for 12A Registration, the organization must be legally registered as a Trust, Society, or Section 8 Company and should work purely on a non-profit basis. The objectives of the organization must be charitable in nature, and its income or assets should not be used for personal benefit of trustees, members, or directors.
After obtaining 12A Registration, the organization is required to maintain proper books of accounts, file annual income tax returns, and comply with statutory requirements regularly. This registration significantly enhances the credibility of the NGO and is often a mandatory prerequisite for obtaining 80G Registration, government grants, CSR funding, and donor support.
In summary, 12A Registration is the foundation for tax exemption and long-term financial sustainability of an NGO. It ensures lawful functioning, promotes transparency, and enables the organization to focus entirely on its charitable mission without tax-related constraints.
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