Section 12A of the Income Tax Act, 1961 is a crucial provision for non-profit entities (like charitable trusts, societies, and NGOs) in India. It provides tax exemption on the income of these organizations, provided they are registered under Section 12A/12AB.
🔹 What is Section 12A?
Section 12A lays down conditions and procedural requirements for charitable or religious institutions to be eligible for tax exemptions under Sections 11 and 12 of the Income Tax Act.
Without registration under Section 12A (now 12AB), the income of a charitable or religious organization will be fully taxable.
🔹 Registration under Section 12A / 12AB
As per recent amendments:
- Earlier, registrations were done under Section 12A.
- Now, fresh and re-registrations are done under Section 12AB, introduced from April 1, 2021.
🔹 Purpose of Registration
- Tax Exemption on income used for charitable or religious purposes.
- Eligibility for 80G registration (which allows donors to get tax deductions).
- Proof of genuine charitable activities for donors and government authorities.
🔹 Types of Registrations (as per amended law)
| Type | Description |
|---|---|
| Provisional Registration | Given to newly formed trusts for 3 years (valid for 3 years from the assessment year). |
| Final Registration | Granted for 5 years after proper verification of activities. |
| Re-registration | All existing registered trusts had to re-register under Section 12AB by June 30, 2021. |
🔹 Documents Required for 12A/12AB Registration
- Trust Deed/By-laws
- PAN Card of the organization
- Registration Certificate under other acts (like Societies Act)
- Details of activities since inception
- Financial statements (past 3 years, if applicable)
- List of trustees/board members
🔹 How to Apply?
Application is made online using Form 10A or Form 10AB on the Income Tax e-filing portal:
- Form 10A for fresh/provisional registration
- Form 10AB for renewal or conversion from provisional to regular
🔹 Time Limit to Apply
- Within 1 month before the commencement of the previous year for which exemption is sought.
- Existing institutions had to migrate to 12AB by June 30, 2021.
🔹 Summary
| Section | Purpose |
|---|---|
| 12A | Original section for tax exemption registration (now transitioned to 12AB) |
| 12AB | New system of registration for charitable/religious entities |
