NGOs are organizations involved in charitable and non-profit activities. However, they do earn income and they are required to pay tax as per normal rates if not registered under section 12A, Income Tax Act. 12A registration is a one-time registration which is provided by the Income Tax Department to trusts and other not for profit organizations. The sole purpose of this registration is to be exempted from the payment of income tax on surplus income.
80G Certificate is issued to a non-profit organization or non-governmental organizations (NGO), a charitable trust or a Section 8 Company by the Income Tax Department. 80G certificate is issued to attract more donors to donate funds to such organizations. The donor gets tax exemption of his donation by donating to such NGO as the donor is allowed to deduct their donations from their gross total income.
Benefits of 80G/ 12A registration:
- Complete exemption of taxes from Income Tax Department
- Allow donors to get deduction of their donation under 80G
- Registration under Section 12A helps the organizations to seek grants from government & organizations abroad