SECTION 12A REGISTRATION: NON-PROFIT ORGANIZATIONS

12A is registration provided by the Income-tax department to a not-for-profit organization, such as trust, society, or NGO. The main purpose of this registration is to get exempted from paying the Income-tax. It is necessary for a not for profit organization to get registered under section 12A to gain this benefit, irrespective of all the acts under which they have been registered as per law. 

Earlier, the registration under section 12A was a one-time registration for all not-for-profit organizations however; this has been changed by the Government. Commencing from April 1st, 2021, the registration will be fixed for a period of 5 years, after which the organizations would have to apply for renewal. 

There has been an eligibility criterion established for qualifying for section 12A registration which is as follows: 

1. For seeking registration under section 12A the first criteria are that the organization must qualify as a charitable organization according to the definition provided in the Income Tax Act. The organization seeking the registration must be established for a charitable purpose such as, providing relief, education, and medical assistance to the poor, or even working to save the environment or any other objective of public utility.
2. Another criterion is that there should not be any profit-making motive of the organizations from the services which they wish to provide. If any of the organizations seeking registration under 12A is found to be doing so, they are disqualified from seeking the benefit under section 12A.
3. In case the applicants are carrying on activities that are related to trade or commerce then the relief provided under section 12A is restricted. 
4. Section 12A registration is not available to Private or family trusts. The activities of the applicants must be for the benefit of the public. 

It must be noted that registration under section 12A does not provide automatic registration under section 80G as well. the benefit of section 80G by getting registered under section 12A is given to only charitable trusts, NGOs have to separately apply for registration under section 80G.

The benefits which are provided by the virtue of section 12A are as follows: 

1. The expenditure incurred by such organizations for a charitable purpose will be allowed while computing the income of the trust. 
2. NOGs receive various grants from the government or other agencies. By registering under section 12A they become eligible to accept grants from other agencies. 
3. Application of income as per section 11 (2) will not be included in the total income of the organization 
4. The benefit of setting aside the income not exceeding a cap of 15% of the total income is granted under section 12A

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.