Section 8 or 12A or 80G Company Registration Tax Exemption Guide
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Legal Darbar will help you in registering Section 12A & 80G which are both helpful in building any type of NGOs without filing income taxes because these both are used for donation purposes.
Section 12A is applicable for the organizations, and 80G is applicable for the donors, but they both are tax exemptions for non-profit organizations. These sections are coming under the Income Tax Act, 1961 in India, which is highly designed to provide tax benefits to non-profit organizations like Section 8 companies, trusts, and societies that work for charitable practices, religious, or social welfare causes. Both of these sections will help in making such organizations receive a reduction or cancellation of the taxes approved by the government, and it will also allow their charity donors to claim tax reductions on donations.
Section 12A:
It will allow them to be exempt from paying income tax on the income they generate through charity.
Section 80G:-
Section 80G will offer a tax reduction to each individual and organization that makes donations to charitable organizations (including Section 8 companies) that are registered under Section 80G.
Key Differences Between Section 12A and 80G:-
• Section 12A will always apply to the organizations and make sure they are exempt from income tax.
• Section 80G will always apply on the donors, and providing them the donations with tax reductions at legaldarbar.com
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Legal Darbar includes Key points for 12A:-
• The organization must be registered under Section 12A to avail of this benefit.
• The income must be used for the charitable or religious purposes as per the objectives stated in the organization’s Memorandum of Association or Trust Deed.
• The organization must file its income tax returns regularly and comply with the provisions of the Income Tax Act.
• Section 12A is required for tax-exempt status for any organization, as it allows the organization to carry forward its tax-exempt status in subsequent years.
Legal Darbar includes Key points for 80G:-
• Donor Benefits: Any Donor have the benefit that he/she can claim to the reductions for the donations when the payable taxes are taking place on the behalf of Section 8 companies that has been approved under Section 80G.
• Reduction Percentage: The amount of reduction percentage will depend on the type of organization and the nature of the donation or what type of donation is there.
• Receipt is required: Donors should always take a receipt from the organization to claim this reduction, and the organization must be registered under the Section 80G without registration the claim will not be accepted.
Legal Darbar will tell how these both registrations are important for any NGO:
• For Organizations: Section 12A registration will ensures that the organization can keep its income tax-exempt status as for long period as it complies with legal requirements.
• For Donors: Section 80G registration will make the donating charitable organizations more attractive and creative, as it allows to reduce taxable income for every individuals and businesses.
Legal Darbar have the will give you the best benefits for Section 12A for Non-Profit Organizations:
- Tax Exemption: The most common benefit of Section 12A is that it provides tax exemption to non-profit organizations on the income they generate, and the income they generate it will used for their own charitable organization only not distributed the members and this tax exemption allows organizations to make more funds for their activities.
- Credibility and Trust: It will enhance the credibility and trust of the organization, as it clearly defines that the organization is working towards a social welfare or on charity. It helps to build trust with donors, stakeholders by showing that the organization complies with the legal requirements for the tax reduction.
- Sustainable Operations: The tax exemption can help the organization to sustain its activities without any pressure of paying taxes on the income they earned because they spent their whole income in the betterment of their charitable organization. It will ensures that the organization can focus only on achieving its mission without any financial problem.
Legal Darbar have the will give you the best benefits for Section 80G for Donors:
- Tax reductions for Donors: Section 80G provides tax reductions to individuals and organizations that donate to non-profit organizations. That will encourage the charitable donations and Donors can reduce their payable tax income by claiming reductions for the donations made which will reduces the tax liability. For example: Donations come under the organizations (like Prime Minister’s National Relief Fund, National Defence Fund, etc.) are eligible for 100% tax reduction. While Donations come under the most registered charitable organizations are eligible for a 50% tax reduction.
- Encourages the charity: The tax benefits provided under Section 80 G make donating more attractive, encouraging individuals and businesses to contribute more generously to charitable causes. It creates a situation where donors get tax benefits called the wining situation and the charitable organization which receives more funds for its activities.
- Transparency and Quality Assurance: The donations which are registered under Section 80 G are subject to inspection done by the tax authorities which ensures that the donations are being used for the stated charitable purposes. It provides donors with transparency and Quality assurance contributions are used appropriately.
- Financial Bonus for Corporate Social Responsibility (CSR): Corporate donors can benefit from Reductions for donations made to non-profit organizations under Section 80G, which helps them to meet their CSR (Corporate Social Responsibility). This will allow the companies to align their business activities with social welfare and causes that will increase their reputation socially.
Documents required for both 12A and 80G Registration:-
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- A formal Letter: An application letter that covers the registration under section 12A of the income tax Covering Letter.
- Other Certificates: Copy of the Memorandum of Association (MOA) and Articles of Association (AOA) because these documents clearly outline the charitable scope of the organization.
- A copy of the registration certificate: Copy of registration certificate which is under relevant laws. In case the organization is registered as a Section 8 company, it will provide the certificate of incorporation should be issued by the ROC registrar of companies.
- Inspection of Financial Statements: An inspection financial statements copy which includes (balance sheet, profit and loss amount) at least the last three years copy or If the organization is new then an estimated financial statement is must.
- PAN Card of the Organization: The Permanent Account Number (PAN) of the organization is required to apply for registration.
- List of Trustees or directors: A list of names, addresses, and contact details and address proof of all the trustees and directors, what is required for company incorporation.
- Non-Profit Declaration: A declaration stating that the organization operates on a non-profit basis and all its income is being utilized for charitable or religious purposes only.
- Form 10A: This Form is an official application form for registration comes under Section 12A. The form must be submitted digitally on the Income Tax Department’s .
- Local authorities proof of registration: submit a copy of the registration. If the organizations required.
- NOC from the Government: Need to submit the NOC from the relative government department. If the organization has government sponsorship or any government-related activities. legaldarbar.com
FAQs of 12A and 80G?
It must be a religious trust or a charitable institution. Your organization must render charitable services. Your organization’s accounts must be audited annually.
12A & 80G registrations are typically valid for five years. To maintain tax-exempt status, organizations need to re-apply for registration at least six months before the existing one expires.
You can apply by filling out Form 10A on the Income Tax Department’s website and submitting the required documentst to Legal Darbar which will guide you through each step of the online application process.
Yes! Both applications can be applied together or it can also be applied separately. If some organization is willing to apply separately then application for registration under section 12A will be applied first.
12A & 80G registrations are typically valid for five years. To maintain tax-exempt status, organizations need to re-apply for registration at least six months before the existing one expires.
Verify your 12A certificate by cross-checking the details on the official income tax department’s website or contacting the relevant government authorities.
In order to help with 12A and 80G registration, Legal Darbar offers professional advice, prepares documents, files applications, ensures compliance, and follows up with authorities to ensure an easy approval process.