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Overview of 12AA Registration in India
Apply for 12AA Registration Online in India and get an exemption from Income Tax. Once this registration procedure is complete, the affiliation's whole revenue cannot be burdened. After the registration is complete, the entity's whole revenue cannot be taxed more than once. The 12AA registration procedure is registered using Form 10A. Only those aware of the 12AA Registration benefit all NGOs for the exemption on Income Tax. So, be aware of it and enjoy its benefits.
Obtaining an income tax exemption is the primary goal of 12AA registration. Following the completion of this registration, the organisation's whole revenue is exempt from taxation. To complete the application for 12AA registration, utilise Form 10A. Processing your Section 12AA registration application is the responsibility of the Income Tax Department Commissioner, who oversees the institution. All NGOs are eligible for income tax exemptions, but only those aware of them and stand to gain from them are eligible. Therefore, Section 12AA of the Income Tax Act must be understood by all NGOs, Trusts, and other not-for-profit organisations to consider the value of the exemption limit.
Form 10A
Organisations that want to register under Section 12AA must file Form 10A. Applications for Section 12AA registration are accepted from entities such as Societies, Charitable Trusts, Religious Trusts, and Section 8 Companies. The 12AA registration process and Form 10A filing are now online and only accessible with the signatory's digital signature.
Benefits of 12AA Registration in India
- The fund you intend to utilise for religious or philanthropic purposes will be considered an application for income. Income application refers to a cost the trust bears for charitable or religious purposes.
- The entire amount received will not be subject to taxes.
- An organisation or individual registered under this provision may benefit from accumulating income for charity or religious purposes up to 15%.
- Because Section 11(2) views Income accumulation as the application of income, it is not included in total income.
- NGOs enjoy several advantages, such as obtaining permits from the government and other organisations like private corporations. Some organisations give NGOs financial help. They prefer those NGOs who are registered under 12AA.
- Registration, which is done under Section 12AA, is a one-time process. Once done, registration remains valid until the date of registration cancellation. There is no need to renew 12AA registration; hence, it benefits NGOs.
- Income from charity or religious activity is not subject to income tax for registered trusts and institutions. They may support their programmes and services with the substantial savings they can get.
- Contributions to organisations and registered trusts are exempt from the donor's taxable income. This lessens their tax cost and increases their appeal to contributors.
- Registered trusts and organisations are permitted to accept foreign donations under the terms of the Foreign Contribution (Regulation) Act of 2010. This provides them access to funding from international companies and donors.
- 12AA registration is a sign of recognition and credibility for trusts and institutions. It portrays that the Income Tax Department has examined the trust or institution and meets set standards of transparency and accountability.
Documents Required for 12AA Registration
To apply for 12AA Registration in India, applicants must submit Form 10A along with specific supporting documents. These documents help the Income Tax Department verify the legal existence, financial history, and charitable nature of the organization.
- Founding Document: A self-certified copy of the instrument used to establish the trust or institution, such as a Trust Deed, Memorandum of Association (MOA), or Rules & Regulations.
- Proof of Establishment: If the entity was created without a formal instrument, a self-attested document showing its formation is required.
- Registration Certificate: A self-attested copy of the registration with the appropriate authority (e.g., Registrar of Public Trusts, Firms, Societies, or Companies).
- Amendment Documents: A self-certified copy of documents reflecting any amendments to the trust deed or rules, especially those affecting objectives or operations.
- Financial Statements: Copies of the entity’s annual financial statements for up to three previous financial years.
- Activity Report: A brief note outlining the key activities undertaken by the entity to demonstrate its charitable purpose.
- Previous Orders (if applicable): If registration was previously granted, revoked, or rejected, include self-certified copies of relevant orders from the Income Tax Department.
Eligibility for 12AA Registration
Organisations applying for 12AA registration must meet the following criteria to qualify for income tax exemption:
- Charitable Purpose: The organisation must serve a charitable purpose as defined under the Income Tax Act, such as education, medical relief, poverty alleviation, or environmental protection.
- Non-Profit Motive: The entity should not operate for profit. Applications from profit-driven bodies will be rejected.
- Limited Commercial Activity: If the organisation engages in trade or commerce, its total receipts from such activities must not exceed 20% of total receipts to remain eligible.
- Public Trust Only: Private or family trusts are not eligible. The applicant must operate for the benefit of the public at large.
Meeting these documentation and eligibility standards ensures a smoother approval process and helps NGOs, trusts, and institutions avail the tax benefits under Section 12AA.
Registration Procedure for Obtaining 12AA Registration
The process for obtaining 12AA registration is governed by the Income Tax Act and overseen by the Commissioner of Income Tax. The registration grants tax exemption benefits to eligible non-profit organizations, trusts, and institutions. Here is a step-by-step guide:
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Submit Form 10A Application
Begin by filing Form 10A online on the Income Tax portal. Ensure that all required documents are uploaded and details are filled accurately.
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Review and Request for Additional Information
Once submitted, the Commissioner may request further documents or clarifications to validate the authenticity and activities of the organization. Respond promptly to avoid delays.
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Verification of Activities
The Income Tax Department may conduct inquiries or request evidence to confirm the genuineness of the charitable operations. This can include past financials, activity reports, and related documents.
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Issuance of Order
If satisfied, the Commissioner issues a written order granting registration under Section 12AA. This registration does not require periodic renewal and remains valid for the lifetime of the trust or institution.
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Timeframe
As per Section 12AA(2), the registration must be processed within six months from the end of the month in which the application was submitted. Typically, the full process takes 1 to 3 months.
Cancellation of 12AA Registration
The Income Tax Department may cancel a 12AA registration under the following circumstances:
Under Section 12AA(3)
The Commissioner or Principal Commissioner may revoke registration after providing an opportunity to be heard, if:
- The trust or institution's activities are not genuine.
- The activities deviate from the stated objectives of the trust or institution.
Under Section 12AA(4)
Additional grounds for cancellation include:
- Activities serve the interests of a particular religious community or caste (for post-Act entities).
- Trust income or assets are used for the benefit of specified persons such as trustees.
- Investments are made in prohibited modes.
Why Choose Kanakkupillai?
Kanakkupillai is your trusted partner for smooth and cost-effective 12AA registration. Our platform offers:
- Expert Legal Support: End-to-end services from incorporation to compliance, handled by professionals.
- Affordable Pricing: Competitive and transparent pricing for all registration and advisory services.
- Quick Turnaround: Seamless registration process with quick application handling and updates.
- Additional Services: Assistance with registration under Section 80G(5), along with trust and NGO setup solutions.
Make your NGO or trust compliant and tax-exempt with ease—choose Kanakkupillai for expert-backed, reliable registration support.
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