12a registration

NGOs must register with the IRS under section 12a in order to claim exemptions under Sections 11 and 12 of the Income Tax Act of 1961. NGOs have a variety of alternatives for choosing the constitution type, including trust society, and section 8 businesses. "It is crucial to note that, despite the fact that trust, societies, and section 8 corporations are established in accordance with their own acts, registration under section 12a is required in order to claim an exemption under the Income Tax Act," the statement reads.

A 12a registration was formerly awarded as a one-time registration that would remain in effect until cancelled. Starting on April 1, 2021, all new registrations will only be valid for 5 years, and organisations must request renewal every 5 years.

Section 12a of income tax act - (As amended by the Finance Act, 2020)

According to section 12AB's rules, a Principal Commissioner or Commissioner will receive an application for a new registration under section 12a registration. Organizations will be granted a three-year temporary registration. Once approved, the registration is good for three years starting with the Assessment Year from which it was requested. The following information must be provided in order to renew such a new registration:-

(a) at least six months before the validity term expires, or

(b) within six months after the start of the activities, whichever comes first.

The so-granted provisional registration is only good for three years; it must be renewed at the conclusion of the aforementioned time frames. The registration will need to be renewed at the end of every five years and will only be good for five years.

Migration of existing registrations (As amended by the Finance Act, 2020)

Within three months of the first of April 2021, all registered NGOs must submit a Form No. 10A application for re-validation. A registration that has been so revalidated is only good for five years. After five years, a renewal application for registration must be submitted at least six months before the registration's validity term expires. Form No. 10AB will be used to submit the renewal application.

Section 12a gives lifetime tax exemptions to NGOs if they possess a valid 12a registration number. Section 12a is a great boost for the social welfare conglomerations.

Click here to know something more about section 12a.