80G Certificate is issued to a non-profit organization or a charitable trust or non-governmental organizations (NGO), or a Section 8 Company by the Income Tax Department. The intention behind issuing the 80G certificate is to promote 50% tax benefits to donors so that more and more donors can donate funds to these organizations.
12A Certificate Overview
NGOs are non-profit organizations that are meant for charitable and non-profit activities. However, they might generate income and would be required to pay income tax as per government norms, but if an NGO gets 12A certificate, then this certificate exempts NGO form income tax under section 12A of the Income Tax Act. The Section 12A of the IT Act, 1962 does not differentiate between charitable and religious Trusts. Hence 12A registration is valid to both the kinds of non-profit organizations.
Why to apply for 80G & 12A Registration?
1.NGO can avail income tax exemption by getting itself registered and fulfilling certain other formalities, but such registration does not provide any benefit to the person making donations.
2.To provide income Tax benefits to the “donors”, all NGO’s must apply for 80G & 12A certification. If an NGO gets itself registered under section 80G & 12A then the person or the organization making a donation to the NGO will get a deduction of 50% of donation amount from taxable income.
3.An NGO is applicable for government funding only, if it is registered under 80G & 12A.
4.A newly registered NGO can also apply for 80G & 12AG registration.
5.NGO does not have to pay tax for the entire lifetime if it gets registered under section 80G & 12A.
6.An NGO can apply for 12A certification and 80G certifications just after the registration of an NGO.
Decision: - Is an 80G certification required for your NGO to attract more donors?