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80G & 12A Registration

80G & 12A Registration



What is 80G & 12A ?

The terms "80G" and "12A" are related to income tax exemptions and registrations for non-profit organizations (NPOs) or charitable institutions in India. These provisions are provided under the Income Tax Act, 1961, and they pertain to different aspects of taxation and registration for such organizations.

Section 80G:

Purpose: Section 80G of the Income Tax Act, 1961, provides tax benefits to donors who contribute to eligible charitable organizations or trusts. It allows donors to claim deductions on the amount donated when calculating their taxable income.
Benefits for Donors: Donors can claim a deduction of up to 50% or 100% of the donated amount, depending on the specific nature of the organization and the government's approval.
Approval and Certification: Charitable organizations or trusts must obtain approval under Section 80G from the Income Tax Department to be eligible for this benefit. The department assesses the organization's activities and ensures that the donations will be used for charitable purposes.
Validity: The approval under Section 80G is typically granted for a specific period and must be periodically renewed to maintain eligibility.
Section 12A:

Purpose: Section 12A of the Income Tax Act, 1961, deals with the registration and exemption of non-profit organizations from paying income tax on their income. It provides recognition to these organizations as entities exempt from taxation.
Benefits for NPOs: Non-profit organizations that obtain registration under Section 12A are exempt from paying income tax on their income, including income from donations, grants, and other sources.
Registration Requirement: NPOs seeking tax exemption under Section 12A must apply for and obtain registration from the Income Tax Department. This registration is typically granted if the organization's primary purpose is charitable or for the advancement of a social cause.
Periodic Renewal: Registration under Section 12A is usually granted without an expiration date, but NPOs are required to maintain their eligibility and continue to meet the criteria for exemption.
In summary, Section 80G provides tax benefits to donors who contribute to registered charitable organizations, allowing them to claim deductions on their taxable income. Section 12A, on the other hand, deals with the registration and exemption of non-profit organizations from paying income tax on their income, subject to certain conditions and criteria.

Both provisions play a crucial role in promoting charitable activities and facilitating financial support for non-profit organizations in India. However, it's important for organizations and donors to comply with the relevant legal requirements and seek professional advice when necessary to fully understand and utilize these provisions.

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