Section 12A

Section 12A is a rule that lets charitable and religious trusts or institutions get tax exemptions on their income.

Think of it like this:
If a trust helps society (like running a school, hospital, or food bank), it shouldn’t have to pay tax on donations or income. But to claim this benefit, the trust must register under Section 12A.

Purpose of Section 12A

• To promote non-profit activities
• To exempt income of eligible charitable or religious organizations
• To ensure only genuine institutions get tax benefits

Who Can Register Under Section 12A?

The following can apply:

• Charitable trusts
• Religious trusts
• Non-profit NGOs (registered as trusts or societies)
• Section 8 companies (non-profits under Companies Act)

Eligibility Criteria

To be eligible for Section 12A registration, the organization must:

1. Be formed only for charitable or religious purposes
2. Not use income or assets for personal benefit
3. Keep proper books of accounts
4. Be legally registered as a trust, society, or Section 8 company
5. Apply for registration within 1 month of starting charitable activity (though late registration is allowed)

How to Register Under Section 12A?

1. Apply online via Income Tax portal using Form 10A
2. Upload documents like:
   • Trust deed or registration certificate
   • PAN of the organization
   • Details of trustees or office bearers
   • Financials (if any)
3. Income Tax Department may ask questions or documents
4. If all is clear, registration is granted—usually valid for 5 years, renewable

Benefits of Section 12A Registration

1. Tax Exemption: Income used for charity is not taxed
2. Eligibility for 80G: Donors can also get tax benefits
3. Credibility: Helps with funding and CSR approvals
4. Carry Forward Surplus: Allows unused income to be carried forward

What Happens Without 12A Registration?

• The trust or NGO will have to pay tax like a business
• Donations and grants may become taxable income

Simple Example:

An NGO running free eye checkups in villages gets ₹10 lakh in donations.
If it’s registered under Section 12A, this amount is not taxed if used for the NGO’s work.
Without registration, they may pay income tax on the ₹10 lakh.

Validity & Renewal

• New registrations are usually valid for 5 years
• Must be renewed before expiry
• Provisional registrations are available if you’re just starting

Conclusion

Section 12A helps genuine charitable and religious groups save tax and focus on good work. If you run an NGO or trust, getting registered under this section is a must. It builds trust, saves money, and opens doors to more funding.