NGOs have multiple options to choose the type of constitution, like trust, society and section 8 company so as to get exemptions under section 11 & 12 of Income Tax Act, 1961, it’s mandatory for all NGOs to obtain registration under section 12A of the act. “It is important to note here that whether the trust, society and section 8 companies are registered as per their respective acts, the registration under section 12A is mandatory to get an exemption under tax Act.”
Earlier registration under 12A was given one-time registration and once the registration is granted it’ll hold good till cancellation. From 1st October 2020, all new registration are going to be given for five years only and organisation has got to apply for renewal after every 5 years.
New Registration (As amended by Finance Act, 2020)
An application for fresh registration under section 12A are going to be given to Principal Commissioner or Commissioner, as per provisions of section 12AB. Provisional registration for 3 years are going to be given to organisations. The registration once granted shall be valid for 3 years from the Assessment Year from which the registration is filed. Application for renewal of such new registration must be submitted:
- a minimum of six months before the expiry of validity period or
- within 6 months from commencement of activities,
whichever is earlier.
The registration so granted shall be valid for a period of 5 years and further must be renewed after every 5 years of time .
Important Note: In cases of latest registration, the application shall be submitted, a minimum of one month before the commencement of the previous year relevant to the assessment year that registration is meaning thereby new NGO won’t be entitled to possess the advantage of registration of section 12AB within the first year of operation.
Migration of existing registrations (As amended by Finance Act, 2020)
All registered NGOs are required to apply for re-validation within three months from 1st October 2020. Registration so re-validated shall be valid just for 5 years. the application for the renewal of registration (after five years) must be submitted a minimum of six months before the expiry of validity period.
No Simultaneous benefits for NGOs (As amended by Finance Act, 2020)
Where any organisation’s registration has become non-operative thanks to simultaneous exemptions in various other sections [10(23C)] therein case it’s to reapply under section 12AB. The registration are going to be given for five years, has got to be renewed in every five year. the application to be submitted a minimum of 60 months before expiry of registration.
Change or Modification of objects clause of NGOs (As amended by Finance Act, 2020)
Where an organisation has been granted registration and subsequently there’s change or modification of objectives of that organisation then during this case it’s to re-apply for registration with modified or changed objectives under section 12AB. The registration are going to be given for five years, which has got to be renewed in every five year. the application for registration shall be submitted within 30 days from such change in objectives.
In order to get exemption, an NGO should make an application to the Principle Commissioner or Commissioner of tax in Form 10A. it’s also been as long as the shape No. 10A shall be furnished electronically under digital signature (DSC), if the return of income is required to be furnished under digital signature or through electronic verification code (EVC) the subsequent documents are required to be submitted:
- Where the trust is created , or the institution is established, under an instrument, self-certified copy of the instrument creating the trust or establishing the institution;
- Where the trust is created , or the institution is established, otherwise than under an instrument, self-certified copy of the document evidencing the creation of the trust, or establishment of the institution;
- Self-certified copy of the registration with Registrar of Societies or Registrar of Public Trusts etc.
- Self-certified copy of the documents showing adoption or modification of the objects of the trust/society, if any;
- Where the trust or institution has been in existence during any year or years before the fiscal year during which the application for registration is submitted , self-certified copies of the annual accounts of the trust or institution concerning such prior year or years (not being quite three years immediately preceding the year during which the said application is created) for which such accounts have been created.
- Note on welfare activities conducted by the trust or institution
- Self-certified copy of existing order granting registration under section 12A or section 12AA, as the case may be; and
- Self-certified copy of existing order of rejection of application for grant of registration u/s 12A or section 12AA,as the case may be , if any.