Section 12A & 12AB Income Tax Act Insights

1. Section 12A offers tax exemption to non-profit organisations for income generated from their charitable or religious activities. It enables these organisations to use their funds more efficiently for their social welfare goals without the hassle of taxation.
2. Non-profit organisations need to apply for registration under Section 12A with the Income Tax Department in order to qualify for tax exemptions. Registering confirms the organization's eligibility and guarantees compliance with regulatory requirements.
3. When applying for registration under Section 12A, you need to submit Form 10A to the Commissioner of Income Tax (Exemptions) within the specified time limits. The application process involves providing the required documents and information regarding the organisation's activities and goals.
4. Organisations registered under Section 12A need to ensure that their activities align with their charitable or religious purposes. It is important to adhere to the requirements outlined in the Act, such as keeping accurate records and other necessary documents.
5. Donors can benefit from making donations to organisations registered under Section 12A as they are eligible for deduction under Section 80G of the Income Tax Act. Encouraging people and businesses to donate to charitable causes helps to strengthen the efforts of non-profit organisations.

1. If the trust or institution is created, or established under an instrument, a self-certified copy of such instrument creating or establishing the trust or institution
2. If the trust or institution is formed or set up without a formal document, a self-certified copy of the document proving its creation or establishment is required.
3. A copy of the registration with the appropriate authority is required.
4. Copy of registration under FCRA required if the applicant is registered under such Act.
5. Copy of the current registration order under section 12A or 12AA or 12AB, as applicable
6. A self-certified copy of the order of rejection of the application for the grant of registration under section 12A or 12AA or 12AB, as applicable, if any;
7. If there are existing entities, please provide copies of annual accounts for the period not exceeding 3 years immediately preceding the year in which the application is made.
8. If the entity's income includes profits and gains of business according to the specified section, copies of annual accounts and audit report for the three years before the application year must be provided.
9. A copy of the documents proving adoption or modification of the objects is required.
10. Observations regarding the operations of the applicant trust or institution
11. If you have registered on the DARPAN Portal, please provide the details of your registration.

1. It is important for organisations to make sure that their activities align with charitable or religious purposes, as outlined in the Income Tax Act. Not aligning to the specified goals might put their Section 12A status at risk.
2. It is essential for non-profit organisations to keep their books of accounts accurate and current, which should include details of income, expenses, assets, and debts. Following correct accounting procedures is crucial for upholding transparency and accountability, both of which are necessary for retaining Section 12A status.
3. Organisations registered under Section 12A must submit annual returns to the Income Tax Department by the specified deadlines. The returns offer a comprehensive overview of the organization's activities, finances, and adherence to regulatory standards.
4. Income from non-profit organisations must be used exclusively for charitable or religious purposes. If funds are diverted for non-charitable purposes, it may result in the cancellation of Section 12A status.
5. Organisations need to inform the Income Tax Department about any modifications in their operations, legal structure, office bearers, or other important information. If not done, your Section 12A registration may be suspended or cancelled.
6. It is important for non-profit organisations to follow all applicable laws, regulations, and guidelines that govern their operations. Adhering to regulations such as tax deduction at source (TDS), foreign contributions, and other relevant rules is essential.
7. It is important for organisations to keep accurate records and documents regarding their activities, finances, and compliance efforts. These documents provide proof of the organization's qualification for Section 12A status and could be reviewed by tax authorities.

1. It is crucial for non-profit organisations involved in charitable or religious activities to comply with Section 12A of the Income Tax Act, 1961. Here's the reason:
2. Non-profit organisations can access tax benefits through Section 12AB registration, which allows them to qualify for tax exemptions on income generated from their charitable or religious activities. Meeting the registration requirements guarantees that organisations can access tax benefits, allowing them to dedicate more resources to their social welfare goals without the weight of taxation.
3. compliance with Section 12A indicates an organization's dedication to transparency, accountability, and good governance, which enhances credibility and trust. This indicates that the organisation functions in accordance with the legal framework established by the Income Tax Department and complies with regulatory requirements. It boosts the organization's credibility and trust among donors, supporters, beneficiaries, and other stakeholders.
4. Section 12AB registration offers legal acknowledgment to non-profit organisations as authentic charitable or religious entities. Ensuring compliance with the registration process aligns the organization's objectives and activities with the criteria established by the Income Tax Department for tax exemption purposes. This validation enhances the organization's reputation and credibility in the eyes of the law and society.
5. Following Section 12A makes it easier for non-profit organisations to receive donations and funding. People are more likely to donate to organisations registered under Section 12A because it assures them that their donations will be used for genuine charitable causes. Accessing funding helps non-profit organisations sustain and grow while achieving their mission and goals.