12A and 80G Registration for NGOs: Procedure, Fees and Documents
In India, NGO Registration, along with 12A and 80G registrations, is very important for NGOs to operate effectively within the legal and financial frameworks. The Income Tax Department grants these registrations, which provide crucial tax benefits that significantly enhance the operational capabilities of NGOs, allowing them to focus on their charitable work.
12A Registration: The NGOs are exempted from paying taxes on the income they generate, provided that the money is used for purely charitable purposes. This exemption ensures that the NGO can use its earnings to pursue its mission without the added burden of paying taxes on the income. Obtaining 12A registration establishes the NGO's legitimacy as a charitable entity and aligns it with the requirements of the Income Tax Act.
80G Registration is also equally important, as it gives donors tax deductions for their contributions to the NGO. This encourages more people and corporations to donate, knowing that they will receive a financial benefit in the form of reduced taxable income. Donations to NGOs with 80G registration can be deducted either 50% or 100% of the donated amount, depending on the type of NGO. All these registrations collectively strengthen the credibility of NGOs while promoting long-term sustainability and a culture of giving.
12A & 80G Sample Documents
Table of Content
- What is 12A and 80G Registration for NGOs?
- Benefits of 12A and 80G Registration for NGOs
- Documents Required for 12A and 80G Registration for NGOs
- Process for 12A and 80G Registration for NGOs
- Fees for 12A and 80G Registration for NGOs
- Validity of 12A and 80G Registration for NGOs
- Conclusion
- Frequently Asked Questions
What is 12A and 80G Registration for NGOs
In India, 12A and 80G registrations are required for NGOs that seek to work for charitable purposes and function according to the Income Tax Act. These registrations provide most of the tax benefits and enhance trust and transparency of the NGO among the donors, supporters, and the general public.
12A Registration for NGOs: 12A Registration is granted to NGOs so that they are exempted from paying income tax on the income generated through their charitable activities. This means surplus funds of the NGO if used for its charitable purpose, do not fall under tax. To become eligible for 12A registration, an NGO has to prove that its income is used for charity or social welfare. After getting registered under 12A, the NGO gets recognized by the Income Tax Department as a tax-exempt organization, which in turn makes it more attractive for donations and grants.
80G Registration for NGOs: 80G Registration provides tax deductions for donors against the contribution made to an NGO. Based on the category of the NGO, donors can get either 50% or 100% of the amount donated as a deduction from their taxable income. This registration provides a stimulus for people and organizations to donate to the NGO, thus increasing the funds for the programs run by it.
Benefits of 12A and 80G Registration for NGOs
In India, registration under the provisions of 12A and 80G is an important certification for non-profit organizations like Trusts that allow such organizations to work much more efficiently in fulfilling their objectives. Here are ways in which these registrations aid such organizations::
- Tax Benefit (12A Registration): According to Section 12A of the Income Tax Act, NGOs and trusts are exempted from the payment of income tax on their surplus funds. In this way, the organization can utilize a much larger portion of its income to meet its charitable objectives, free from tax burdens.
- Tax Deduction for the Donor (80G Registration): By Section 80G, the donor can deduct the amount that is invested in and up to 50% of the contribution donated. This way more individuals and corporations will find an incentive to donate, increasing the funding scope of the organization.
- Enhanced Credibility: Possession of 12A and 80G registrations boosts the credibility of Trusts and trusts before donors, government, and stakeholders by ensuring transparency and accountability.
- Eligibility for Government Grants: Registered institutions are generally qualified to apply for various government grants and schemes that provide an extra boost in financing for the implementation of their projects.
- Attracting CSR Contributions: Organizations registered under 80G can attract contributions from business houses through their CSR programs, widening scopes of reach and impact.
- Long-term Viability: The tax exemptions and consequent enhanced donor contributions accrue in favor of the individual societies and trusts, ensuring their viability in the long run, thus allowing them to devote their energy toward the overarching concern of charity without the constant strain of financial viability.
Documents Required for 12A and 80G Registration for NGOs
To apply for 12A and 80G registration for NGOs must provide specific documents to establish their eligibility and compliance. Below is a comprehensive list:
- Common Documents for 12A and 80G Registration
- Specific Documents of 12A Registration
- Specific Documents of 80G Registration
- Memorandum of Association (MOA)
- Pan Card
- Registration Certificate
- Address Proof
- Financial Statement
- Details of Activities
- Bank Account Details
- Form 10A
- Donor Details
- Activity Report
- Financial Records
- Form 10G
Procedure for 12A and 80G Registration for NGOs
Applying for 12A and 80G registration for NGOs involves a streamlined online process through the Income Tax Department’s e-filing portal. Here is a step-by-step guide:
Step 1: Eligibility Check
- Your organization must be a Trust, Society, or Section 8 Company that is undertaking charitable, religious, or educational activities.
Step 2: Preparation of Documents
- Gather the necessary documents, such as registration certificates, trust deeds or MOA/AOA, PAN cards, financial statements, activity reports, and details of governing members.
Step 3: Online Application
- Login to the Income Tax Department's e-filing portal.
- Form 10A is for registration under 12A, and Form 10G is for registration under 80G.
Step 4: Upload Documents
- The applicant needs to upload all supporting documents along with the forms.
Step 5: Authority Review
- The Income Tax Department will scrutinize the application form and may ask the applicant for additional information or documents.
Step 6: Approval
- The department issues 12A and/or 80G certifications after successful verification.
Fees for 12A and 80G Registration for NGOs
There are no fees levied by the Income Tax Department for the 12A and 80G registration process for NGOs
| Category | Details | Approximate Cost (₹) |
|---|---|---|
| Government Fees | No direct fees for Form 10A (12A) or Form 10G (80G) | ₹0 |
| Document Preparation | Auditing, drafting financial statements, and legal documents | ₹5,000 - ₹15,000 |
| Follow-ups and Representation | Additional charges for handling queries or objections | ₹5,000 - ₹10,000 |
| Total Estimated Cost | Combined cost for professional and other services | ₹10,000 - ₹50,000 |
Note: Although the fee is variable, the entire cost will depend upon the level of applicability and the requirement for professional aid.
- Professional Fee For 12A and 80G Registration for NGOs start from ₹5,000 Each.
- Note: The aforementioned fees are exclusive of GST
Validity of 12A and 80G Registration for NGOs
For 12A and 80G registrations, for NGOs, there is the jurisdiction of the Income Tax Act while these need periodical renewals under the existing latest rules of renewal.
12A The initial registration given was a lifetime registration with no expiry date. However, in the Finance Act, 2020, amendments introduced the renewal for NGOs for maintaining 12A registration. This renewal is not only compulsory the first time at the end of the deadline set but also 5 years afterward.
Similarly, 80G Registration also operates on a renewal basis after the Finance Act, 2020. The registrations issued before this without an expiry date have to be revalidated. After revalidation, the registration is valid for 5 years and has to be renewed thereafter.
Changes facilitate societies to avoid regulatory noncompliance, preserve transparency in transactions, and claim tax benefits while continuing their activity. Societies must renew, so that nothing interrupts their exempt status and access to donor rewards. Monitoring activity and applying early enough for a renewal are all the more imperative to ensure seamless validity of both 12A and 80G registrations.
Conclusion
12A and 80G registrations are very essential for non-profit organizations and NGOs to work transparently and efficiently under the legal and tax framework of India. It is not only beneficial for tax exemptions for the organization but also benefits the donor in terms of tax deductions, which in turn encourages more monetary support for charity. The 12A registration provides the society with income tax exemptions on funds used for its charitable purposes, while the 80G registration encourages donations by offering tax deductions to donors.
Frequently Asked Questions (FAQs)
What is the 12A registration for NGOs?
12A registration provides income tax exemptions to charitable NGOs, allowing them to utilize surplus funds for their social and charitable purposes without paying tax on it. It ensures that the society's income is not taxed, as long as it is used for the society's charitable activities.
What is the 80G registration for NGOs?
80G registration allows donors to claim tax deductions on donations made to the society. It incentivizes contributions to charitable organizations by reducing the donor’s taxable income, either by 50% or 100%, depending on the society’s category.
What is the fee for applying for 12A and 80G registration?
There are no government fees for filing applications for 12A and 80G. However, NGOs may incur professional fees for document preparation and submission, which typically range between ₹10,000 and ₹50,000, depending on the complexity of the application.
Can an NGOs apply for 12A and 80G registration simultaneously?
Yes, NGOs can apply for both 12A and 80G registrations at the same time. However, 12A registration must be obtained first, as 80G registration requires the NGOs to already have 12A status.
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