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Trust/NGOs

OVERVIEW

Trust registered for charitable or religious purposes which objective are not intended to do commercial activities to make a profit and they are get allowed various benefits under the Income-Tax Act, inter-alia, exemption under section 11.

12A and 80G Registration.

The 12A and 80G Registration applications can be applied together or it can also be applied separately also. If any organization wants to apply both applications separately, then application for registration u/s 12A will be applied first. Getting 12A registration is mandatory for applying application for registration u/s 80G of Income Tax Act, 1961.

The following are the benefits of Section 12A registration as below:

1) The income applied to other charitable Trust/NGOs purposes will be considered as an application of income i.e. expenditure incurred for charitable or religious purposes will be allowed while computing income of the trust.

2) The benefit of accumulating income not exceeding 15% for charitable or religious purposes will be available. i.e there is no need to trust/NGOs applied their income up to 15% of their income.

3) The accumulation of income as per section 11(5) of the income tax act, which is deemed as the application of income as per section 11(2), shall not be included in the total income.

4) NGO’s/Trust receive various grants from the government and individual, & corporate bodies, and other entities. These entities generally make grants to those trust/ NGOs that have 12A & 80 G.

5) Benefit in Section 80G registration. those who are giving donations to NGOs will get benefit/Deduction of their Personal income tax return.

6) Benefit in FCRA registration. those Trust/NGO’s are seeking foreign contributions, they must have valid FCRA registration from the Ministry of Home Affairs.

8) Registration under section 12A is a one-time registration. it can not be revoked by Government only if non-compliances did by trust/NGOs under income tax provision.

 

Following are the disadvantages of Trust

  1. The new process of registration will impose a higher administrative burden on tax authorities.
  2. This new process of registration will become more cumbersome and costlier to the NGOs.
  3. The additional burden on NGOs in case of delayed filing of returns.
  4. NGOs/Trust who are getting donations from overseas organizations is exposed to higher risks.
  5. Government authorities always monitor, control, and scrutiny the activities of NGOs/Trust.

80G Registration procedure consists of the following steps:

  1. NGOs/Trust has to submit an application for an 80G certificate to the Commissioner of Income Tax (Exemption) in their jurisdictional area.
  2. After the registration of the form of 80G, the department sends an inspector for checking their physical verification.
  3. The Department might ask for additional documents and evidence like a list of purpose activity and activity done by NGOs/Trust.
  4. After the satisfactory verification and scrutinizing of documents of NGO, the 80G certificate is awarded to the NGOs by the Commissioner.

Following documents required by the trust for applying the 12A & 80G

  • Form 10G.
  • Trust Deed in case of a Trust, certificate of incorporation & MoA in case of Section 8 companies and Societies.
  • NOC (No objection certificate) from the Landlord where the registered office is situated.
  • Copy of PAN card of the NGO.
  • Copy of Utility Bills – Electricity bills, water bills, or House Tax Receipt.
  • Donation Receipt along with details of the donor and their PAN & address.
  • Balance Sheet and Income & Expenditure  & Income Tax Return documents, of last three years.
  • List of activities done, activities on process & the progress report & Proposed Activities to be done for last three years.
  • A detailed list of the board of trustees.
  • Deed for Verification – Original RC, MoA, or Trust Deed.
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OVERVIEW

Trust registered for charitable or religious purposes which objective are not intended to do commercial activities to make a profit and they are get allowed various benefits under the Income-Tax Act, inter-alia, exemption under section 11.

12A and 80G Registration.

The 12A and 80G Registration applications can be applied together or it can also be applied separately also. If any organization wants to apply both applications separately, then application for registration u/s 12A will be applied first. Getting 12A registration is mandatory for applying application for registration u/s 80G of Income Tax Act, 1961.

The following are the benefits of Section 12A registration as below:

1) The income applied to other charitable Trust/NGOs purposes will be considered as an application of income i.e. expenditure incurred for charitable or religious purposes will be allowed while computing income of the trust.

2) The benefit of accumulating income not exceeding 15% for charitable or religious purposes will be available. i.e there is no need to trust/NGOs applied their income up to 15% of their income.

3) The accumulation of income as per section 11(5) of the income tax act, which is deemed as the application of income as per section 11(2), shall not be included in the total income.

4) NGO’s/Trust receive various grants from the government and individual, & corporate bodies, and other entities. These entities generally make grants to those trust/ NGOs that have 12A & 80 G.

5) Benefit in Section 80G registration. those who are giving donations to NGOs will get benefit/Deduction of their Personal income tax return.

6) Benefit in FCRA registration. those Trust/NGO’s are seeking foreign contributions, they must have valid FCRA registration from the Ministry of Home Affairs.

8) Registration under section 12A is a one-time registration. it can not be revoked by Government only if non-compliances did by trust/NGOs under  income tax provision.

 

 

Following are the disadvantages of Trust

  1. The new process of registration will impose a higher administrative burden on tax authorities.
  2. This new process of registration will become more cumbersome and costlier to the NGOs.
  3. The additional burden on NGOs in case of delayed filing of returns.
  4. NGOs/Trust who are getting donations from overseas organizations is exposed to higher risks.
  5. Government authorities always monitor, control, and scrutiny the activities of NGOs/Trust.

80G Registration procedure consists of the following steps:

  1. NGOs/Trust has to submit an application for an 80G certificate to the Commissioner of Income Tax (Exemption) in their jurisdictional area.
  2. After the registration of the form of 80G, the department sends an inspector for checking their physical verification.
  3. The Department might ask for additional documents and evidence like a list of purpose activity and activity done by NGOs/Trust.
  4. After the satisfactory verification and scrutinizing of documents of NGO, the 80G certificate is awarded to the NGOs by the Commissioner.

Following documents required by the trust for applying the 12A & 80G

  • Form 10G.
  • Trust Deed in case of a Trust, certificate of incorporation & MoA in case of Section 8 companies and Societies.
  • NOC (No objection certificate) from the Landlord where the registered office is situated.
  • Copy of PAN card of the NGO.
  • Copy of Utility Bills – Electricity bills, water bills, or House Tax Receipt.
  • Donation Receipt along with details of the donor and their PAN & address.
  • Balance Sheet and Income & Expenditure  & Income Tax Return documents, of last three years.
  • List of activities done, activities on process & the progress report & Proposed Activities to be done for last three years.
  • A detailed list of the board of trustees.
  • Deed for Verification – Original RC, MoA, or Trust Deed.

Basic

INR 14,999/-

One Time Fee

  • Trust Deed Registration
  • PAN
  • TAN
  • NITI Aayog Registration
  • Bank A/c.

Service Provide Within 7 Days

Standard

INR 39,999/-

One Time Fee

  • Trust Deed registration
  • PAN & TAN Registration
  • Niti aayog Registration
  • 12AA & 80 G Registration
  • Opening Bank A/c.

Service Provide Within 15 Days

Premium

INR 11,999/-

Yearly Fee

  • Yearly Income Tax  Compliance for Trust
  • Income Tax Return

Services Provided Before the Due Date

Frequently Asked Questions

An NGO Stands for non-government organizations, Ngo having the primary objective to make not profit organization.

There are two types of NGOs, The first one is TRUST,  SOCIETY, & Section 8 companies.

To Start the NGOs following members required.

For Trust: There is a minimum of Two members required for registration of Trust (1. Author & 2. Trustee).

For Society: There is a minimum of seven Members required for registration of the society. ( Designation can be given by society itself).

For Section 8 Companies: It works as a corporate body, There is a minimum of Two members required for registration of Section 8 companies.

Section 80G (5) prescribes certain conditions to be satisfied to get the approval u/s 80G:

♠ The Institution should be established in India for Charitable purpose.

♠ If the Institution or fund is deriving any income, such income should not be liable to inclusion in its total income under the provisions of sections 11and 12 or clause (23AA) or clause (23C) of section 10.

♠ If the institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of section 11shall not apply in relation to such income, if:

(a) the institution or fund maintains separate books of account in respect of such business;

(b) the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and

(c) the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business;

There are three Act would be applicable to the NGOs 1. the Indian Trust Act, 1882, 2.  Companies Act 2013 for Section 8 Company, and 3. the society is registered under the society Act 1860.

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  1. Self-certified copy of Trust Deed or Instrument, where the trust is created under an instrument.
  2. Self- certified copy of the document evidencing the creation of the trust, where the trust is created, otherwise than under an instrument.
  3. Self-certified copy of registration with Registrar of Companies (RoC) or Registrar of Firms and Societies or Registrar of Public Trusts.
  4. Self-certified copy of the documents evidencing adoption or modification of the objects, if any;
  5. Where the trust has been in existence for during any year or years prior to the financial year in which the application for registration is made, self-certified copies of the annual accounts of the trust relating to such prior year or years (but not more than 3 years immediately preceding the year).
  6. Note on the activities of the trust or institution.
  7. Self-certified copy of the existing order granting registration under section 12A or section 12AA, if any.
  8. Self-certified copy of the order of rejection of an application for grant of registration under section 12A or section 12AA, if any.
  1. The Principal Commissioner or Commissioner, on receipt of an application for registration of a trust or institution shall

(a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about

(i) the genuineness of activities of the trust or institution; and

(ii) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects and may also make such inquiries as he may deem necessary in this behalf

  1. After satisfying himself about the objects of the trust or institution and the genuineness of its activities and compliance of the requirements he

(i) shall pass an order in writing registering the trust or institution

  1. ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution and a copy of such order shall be sent to the applicant

Please note that no order shall be passed unless the applicant has been given a reasonable opportunity of being heard.

The application for registration has to be filed with the jurisdictional Principal Commissioner or commissioner of Income Tax (exemptions).