Income Tax Exemptions for NGOs

While registering, a NGO should apply for the 12A and 80G certification to avail certain exemptions provided by the Income Tax Department of India. These certificates qualify the trust for a tax exemption under the income tax act on the income of the trust, on the donations it receives and on the income of the donors to the trust.

80G Certification

If the NGO has an 80G certificate, a partial refund is given to the donor on the amount he donates. The donor does not have to pay tax on 50% of the donated amount. If a prescribed amount is paid, the revenue authorities do not fasten any tax liability to the amount. This certificate is issued for a lifetime and does not need to be renewed.

The NGO should fulfill the following particulars:

  • The NGO should not serve any particular religious community or caste.
  • The NGO should not be secretly having any income which is not exempted generally, for instance business income. However, if it does, it should maintain separate books of accounts for the same and should not divert the charitable contributions for the purposes of such business.
  • Laws or objectives of the NGOs should not include provision for spending the income or assets for purposes other than the charitable objectives mentioned in Rules of Association.
  • NGO should maintain regular accounts of its receipts, expenditures and donations.
  • NGO should be registered under the Societies Registration Act 1860 or under any law corresponding to that act or is registered under section 25 of the Companies Act 1956.
  • Trustees or governing body members should not be drawing any undue benefits from NGO funds.

How to get the NGO registered:

  • The NGO should make an application to the Commissioner of Income Tax along with:
  1. A copy of income tax registration certificate
  2. Duly filled in form of 10G
  3. Registration Certificate and MOA/Trust Deed (two copies – self attested by NGO head)
  4. NOC from landlord (where registered office is situated)
  5. Copy of PAN card of NGO
  6. Electricity Bill / House tax Receipt / Water Bill (photocopy)
  7. Copies of audited accounts from the time its foundations were laid or the last three years, whichever is less
  8. A detailed report of all its charitable activities since inception or three years, whichever is less.
  9. Authority letter in favor of NGO Factory
  10. List of donors with their address and PAN

This will further take several months for approval.

You can download the form here: http://www.incometaxindia.gov.in/Pages/downloads/forms.aspx


12A Registration

If an NGO is 12A certified with the Income Tax Department, they can claim tax exemption for their income. They should apply from the day of establishment. If delayed, the NGO has to submit audit reports.

The NGO is eligible only it fulfills the following particulars:

  • The income of the institution is exempt under section 11 or 10(23) or (23AA) or (23C) of the Act.
  • The funds of the institutions are applied only for charitable purposes.
  • The institution is not for the benefit of any particular religious community or caste.
  • The institution maintains regular accounts of its receipts and expenditure.
  • The institution is approved by the Commissioner of Income Tax.

How to get the NGO registered:

The NGO should fill a form 10A and produce it to the Commissioner of Income Tax, Income Tax Department office of that particular district. The NGO should have a PAN card.

Copies of the following should be enclosed along with 10A form:

  1. Registration Certificate and MOA/Trust Deed (two copies – self attested by NGO head)
  2. NOC from Landlord (from registered office)
  3. A Copy of PAN card of your NGO
  4. Photocopy of Electricity Bill / House tax Receipt /Water Bill
  5. Evidence of welfare activities carried out & Progress Report since inception or last 3 years
  6. Books of Accounts, Balance Sheet & ITR (if any), since inception or last 3 years
  7. List of donors along with their address and PAN
  8. List of governing body or board of trustees members with their contact details
  9. Original RC and MOA /Trust Deed for verification
  10. Authority letter in favour of NGO Factory
  11. Any other document or affidavit / undertaking, if extra information is by the Income Tax department

Once the genuineness of the NGO’s activities is established, then the authority passes an order in few months, registering the NGO.

The form for 12A can be downloaded here:
http://www.incometaxindia.gov.in/Pages/downloads/forms.aspx