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12A REGISTRATION
12A registration is a registration process for non-profit organizations in India that are exempt from paying income tax on their income. The registration is granted under Section 12A of the Income Tax Act, 1961.
The main objective of 12A registration is to provide tax exemptions to non-profit organizations, such as charitable trusts, societies and section 8 companies, that are engaged in activities that promote public welfare, religion, or education. The organization must also maintain proper books of accounts and file its income tax returns on time.
Once an organization has been granted 12A registration, it can enjoy tax exemptions on its income from charitable activities. This includes income from donations, contributions, and other sources related to its charitable work.
Benefits of 12A Registration
The benefits of 12A registration are as follows:
Tax Exemptions
Registered non-profit organizations are exempted from paying income tax on their income. Once registered, the organization becomes eligible for exemption from income tax on the surplus generated from its charitable or religious activities.
Increased Credibility
12A registration increases the credibility of the organization in the eyes of donors, volunteers, and other stakeholders.
Enhanced Credibility
12A registration enhances the credibility and trustworthiness of the organization in the eyes of potential donors, beneficiaries, and partners. It demonstrates that the organization has met the necessary legal requirements and is committed to transparency and compliance.
Continuity and Sustainability
12A registration helps ensure the continuity and sustainability of the organization's activities. The registration provides a legal framework that allows the organization to operate with stability and plan for the long term, ensuring the continued pursuit of its charitable or religious objectives.
Compliance Benefits
Registering under Section 12A requires organizations to adhere to certain compliance requirements, such as filing annual income tax returns and maintaining proper books of accounts. Meeting these obligations helps organizations maintain transparency and good governance practices.
Eligibility for Government Funding
Many government departments and agencies provide grants and funding opportunities exclusively to registered organizations. Having 12A registration increases the chances of accessing government grants and collaborating on projects funded by the government.
Opportunities for Collaboration
Registered organizations often have better opportunities for collaboration with other nonprofits, government bodies, and international organizations. Collaborative partnerships can lead to knowledge sharing, resource pooling, and increased impact in addressing social or religious issues.
Better Fundraising Opportunities
Registered organizations often find it easier to raise funds from various sources, including corporate social responsibility (CSR) funds, foundations, and international donor agencies. 12A registration provides a higher level of assurance to potential funders that their contributions will be utilized for genuine charitable or religious purposes.
Legal Recognition
12A registration provides legal recognition to the organization as a charitable or religious entity. It establishes the organization as a separate legal entity with distinct rights and responsibilities, enhancing its legal standing and protecting its interests.
Eligibility for FCRA Registration
Foreign Contribution (Regulation) Act (FCRA) registration is a prerequisite for receiving foreign donations. 12A registration is a requirement to obtain FCRA registration. FCRA registration allows organizations to receive foreign contributions, expanding their funding opportunities.
Documents required for 12A registration
- Pan card of Trust/Society/Section-8 Company.
- Certificate of Trust/Society/Section-8 Company.
- Deed/MOA & RR and AOA of Trust/Society/Section-8 Company.
- All Members/Trustees/Directors Aadhar card and pan card.
- List of Donors.
- Bills of Expenses.
- Photographs of work of organization.
- Bank Statement and Financial Statement of Trust/Society/Section-8 Company.
- List of events.