12AA Registration - Overview
All income of the organization cannot be taxed once this registration is done. Form 10A is used to fill the application form for 12AA registration. Exemption on Income Tax is available for all NGOs but only those who are aware of it and can take benefit out of it.
12AA registration is done with the aim to receive exemption from Income Tax. All income of the organization cannot be taxed once this registration is done. Form 10A is used to fill the application form for 12AA registration. Commissioner of Income tax department who holds the jurisdiction over the institution is responsible to process your application of registration under section 12AA. Exemption on Income Tax is available for all NGOs but only those who are aware of it and can take benefit out of it. Hence, in order to entertain the benefit of exemption limit it is necessary for all NGOs, Trusts, and other Not-for-Profit organizations to be aware of Section 12AA of Income Tax Act.
Organizations who are happy to get registered under Section 12AA necessities to record form 10A. Associations, for example, Societies, Religious Trusts, Charitable Trusts and Section 8 Companies are qualified to apply for Section 12AA enrollment. 12AA registration procedure along with Form 10A filing has been made web and must be made conceivable with the computerized signature of the signatory.
Benefits of 12AA Registration.
The fund which you are planning to use for the charitable or religious purpose will be regarded as income application. In layman term, income application is considered as an expense which is incurred by the trust on charity or on religious purpose.
The final income received will be exempted from tax
Organization or person who is registered under this section can take the advantage of accumulation of income which cannot exceed 15% for the charitable or religious purposes.
Section 11(2) consider accumulation of income as application of income hence it is not included in the total income.
NGOs enjoy the benefit of receiving multiple permits from government and other agencies. There are agencies that provide financial support to NGOs and these agencies usually prefer to make grant to 12AA registered NGO’s
Registration done under Section 12AA is a onetime process. Once the registration is done, it remains valid till the date of cancellation of the registration. 12AA registration does not need to be renewed hence it can be considered as a benefit avail by the NGOs.
Documents Required For Registration
- 12AA registration applicant needs to submit the following documents along with Form 10A
- Instrument’s self-certified copy which was used in the process of creating trust or establishing the institution shall be submitted.
- The foundation or trust may have been made in any case than by method for drafting and registering an instrument. In such cases, a self-attested copy of the document confirming the creation of the trust, or foundation of the institution ought to be submitted to the Income Tax Department.
- Provide a self-attested copy of the registration, which was made with the pertinent body. The relevant body might be the Registrar of Companies, the Registrar of Firms and Societies or Registrar of Public Trusts.
- A self-certified copy of the document which serves as an evidence at the time of adoption or during alteration of the objective of the entity shall be submitted.
- Financial report of the trust/institution for maximum three preceding financial year.
- Note on activities which entity perform
- There a few cases which may force Income Tax Department to cancel the registration issued under this section. Though once the assessee has resolved the issue he can file for the subsequent application. In such a scenario it is essential for the applicant to submit a self-certified copy of the existing order issuing registration.
- n case assessee application has been dismissed, he needs to attach a self-certified copy of the order of rejection with the application.
Process To Register
- Once you have submitted the application in the prescribed format available online, the Commissioner will ask you to submit additional documents as per the additional requirements. The request for further verification of the documents will help in proving the genuineness of the activities of the organization.
- If the Commissioner is happy with the application, then he/she will register the Trust or Institution under Section 12AA, all the Commissioner has to do is pass an order for the registration process to begin.
- The provision of Section 12AA(2) states that registering authority shall pass the order of granting or refusing registration before the expiry of six months from the end of the month in which the application was received.
- All things considered 12AA registration 1 to 3 months long in India. In any case, when a Trust acquires registration, it is legitimate for the lifetime of the Trust and there is no necessity for renewal.
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