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12A REGISTRATION
The 12A registration process in India grants tax exemptions to non-profit organizations engaged in activities promoting public welfare, religion, or education. This registration is for organizations exempt from paying income tax on their income under Section 12A of the Income Tax Act, 1961. To receive 12A registration, organizations must maintain proper books of accounts and file their income tax returns on time. Once an organization has 12A registration, they can enjoy tax exemptions on income from charitable activities, including donations and contributions.
Benefits of 12A Registration
12A registration benefits:
Tax Exemptions
Non-profit organizations that have registered are not required to pay income tax on their income. If a non-profit is registered, they may not need to pay income tax on any additional funds gained from charitable or religious work.
Increased Credibility
If an organization gets 12A registration, people like donors, volunteers, and other important people will think more highly of it.
Enhanced Credibility
Having a 12A registration makes the organization look more trustworthy to people who might want to donate, receive help, or work with the organization. It shows that the organization has followed the rules and is open about what it does.
Continuity and Sustainability
When an organization becomes a 12A, it can continue working towards its goals for a longer time. The registration creates a legal structure that makes the organization more stable and able to plan for the future. Becoming a 12A ensures that the organization can keep helping others or spreading beliefs without any legal issues.
Better Fundraising Opportunities
If a group is registered as a charity, they can get money more easily from different places like companies that want to do good, groups that give money away, and people who give money from other countries. When a charity is registered as 12A, it shows that they are really using the money for good things like helping others or supporting a religion. This makes it more likely that people will want to give them money.
Eligibility for Government Funding
Lots of government branches have money they can give to organizations but only if they are registered. If a group has 12A registration, it is more likely they can get government cash and team up on government-funded projects.
Opportunities for Collaboration
When nonprofits, governments, and international organizations work together, they can share ideas and resources to better address social and religious issues. Registered organizations have a greater chance of forming these partnerships.
Legal Recognition
A 12A registration gives a charity or religious group official recognition as a separate legal organization with its own rights and duties. This helps protect the group's interests and gives it more legal standing.
Eligibility for FCRA Registration
If you want to get donations from foreign countries, you need to register under the Foreign Contribution (Regulation) Act (FCRA). But first, you need to obtain 12A registration to be eligible for FCRA registration. Once you have FCRA registration, you can receive donations from abroad, which can help increase your funding.
Compliance Benefits
Groups can enroll under Section 12A by following certain rules. They should file their taxes every year and keep their financial records organized. By doing this, they prove that they are being open and following good management practices.
Documents required for 12A registration
- Pan card of Trust/Society/Section-8 Company.
- Certificate of Trust/Society/Section-8 Company.
- Deed/MOA & RR and AOA of Trust/Society/Section-8 Company.
- All Members/Trustees/Directors Aadhar card and pan card.
- List of Donors.
- Bills of Expenses.
- Photographs of work of organization.
- Bank Statement and Financial Statement of Trust/Society/Section-8 Company.
- List of events.
