12AA Registration is applicable only to NGO’s and charitable organisations that:-
Have no income being generated from the business
Is either a charitable trust or a registered society
Should not be using their assets or income for any other purpose than charity
Maintains regular book of accounts of their receipts and expenses.
The trustees or the governing body of the organization are not deriving any undue benefit from these funds
They should not be working to benefit any particular caste or religion
If there is business related income, there should be separate accounts maintained for it. The donations received by the NGO should not be used for such businesses.
12AA Registration procedure typically need to be done by an NGO immediately after its incorporation.
What is 12AA Registration?
Now that we have covered 80G Registration we will discuss 12AA registration and 12AA registration process.
By virtue of 12AA registration, Trusts and NGOs and other Section 8 companies enjoy exemption from paying income tax. NGOs are basically organisations that are meant for charitable and non-profit activities. However, they do have income and would be required to pay tax as per normal rates if not registered under section 12AA of the Income Tax Act. The Section 12AA of the IT Act, 1962 does not differentiate between charitable and religious Trusts. Hence 12AA registration is applicable to both the kinds of organisations.
12AA Registration Process
The application needs to be done using Form 10A, as per Rule 17A of the Income Tax Act, 1962. The application needs to be filed with the Jurisdictional Commissioner of Income Tax (Exemptions).
Once the Form and the documents have been received, the Commissioner verifies the authenticity of the activities of the organisation. He can call for additional documents and information as deemed fit.
On the satisfactory report, he will pass an order in writing for grant of 12AA Registration. In case the Commissioner is not satisfied he will reject the application after which the applicant is given a fair chance to be heard.
12AA Registration can be cancelled at any point in time subject to proof that the activities of the organisation being carried out is against the object of the institution or are not genuine or is benefiting a particular religion or caste or the funds are being invested in prohibited modes or income of the institution is being used for the benefit of specific persons.
Validity: 12A Registration valid for a lifetime.
Documents Required for 12AA Registration
The documents required for 12AA registration are as follows:
Documentary evidence of the creation of the Trust or NGO – Trust Deed of a Trust; Registration Certificate and Memorandum of Association of a society; section 8 companies to submit a certificate of incorporation and copies of MOA and AOA of the company.
Three-year bank account statement of the Trust.
PAN card of the organisation.
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