India non profit / public charitable organizations can be registered as trusts, societies, or a private limited non profit company, under section-25 companies. Non-profit organizations in India (a) exist independently of the state; (b) are self-governed by a board of trustees or ‘managing committee’/ governing council, comprising individuals who generally serve in a fiduciary capacity; (c) produce benefits for others, generally outside the membership of the organization; and (d), are ‘non-profit-making’, in as much as they are prohibited from distributing a monetary residual to their own members.

Section 2(15) of the Income Tax Act – which is applicable uniformly throughout the Republic of India – defines ‘charitable purpose’ to include ‘relief of the poor, education, medical relief and the advancement of any other object of general public utility’. Thus, in ascertaining whether a purpose is public or private, one has to see if the class to be benefited, or from which the beneficiaries are to be selected, constitute a substantial body of the public. A public charitable purpose has to benefit a sufficiently large section of the public as distinguished from specified individuals. Organisations which lack the public element – such as trusts for the benefit of workmen or employees of a company, however numerous – have not been held to be charitable. As long as the beneficiaries of the organization comprise an uncertain and fluctuating body of the public answering a particular description, the fact that the beneficiaries may belong to a certain religious faith, or a sect of persons of a certain religious persuasion, would not affect the organization’s ‘public’ character. The internal governance of a section 25 company is similar to that of a society.  It generally has members and is governed by directors or a managing committee or a governing council elected by its members. 

Like a society (but unlike a trust), a section 25 company may be dissolved.  Upon dissolution and after settlement of all debts and liabilities, the funds and property of the company may not be distributed among the members of the company.  Rather, the remaining funds and property must be given or transferred to
some other section 25 company, preferably one having similar objects as the dissolved entity.

1. Trusts

Public charitable trusts, as distinguished from private trusts, are designed to benefit members of an uncertain and fluctuating class.  In determining whether a trust is public or private, the key question is whether the class to be benefited constitutes a substantial segment of the public.  There is no central law governing public charitable trusts, although most states have \"Public Trusts Acts.\"  Typically, a public charitable trust must register with the office of the Charity Commissioner having jurisdiction over the trust (generally the Charity Commissioner of the state in which the trustees register the trust) in order to be eligible to apply for tax-exemption. 
In general, trusts may register for one or more of the following purposes:
Relief of Poverty or Distress;
Education Medical Relief;
Provision for facilities for recreation or other leisure -time occupation (including assistance for such provision), if the facilities are provided in the interest of social welfare and public benefit; and
The advancement of any other object of general public utility, excluding purposes which relate exclusively to religious teaching or worship.

At least two trustees are required to register a public charitable trust.  In general, Indian citizens serve as trustees, although there is no prohibition against non-natural legal persons or foreigners serving in this capacity.

2. Societies
Societies are governed by the Societies Registration Act 1860, which is an all-India Act.  Many states, however, have variants on the Act.
Societies are similar in character to trusts, although there a few essential differences.  While only two individuals are required to form a trust, a minimum of seven individuals are required to form a society.  The applicants must register the society with the state Registrar of Societies having jurisdiction in order to be eligible to apply for tax-exempt status.  A registration application includes the society\'s memorandum of association and rules and regulations.  In general, Indian citizens serve as members of the managing committee or governing council of societies, although there is no prohibition in the Societies Registration Act against non-natural legal persons or foreigners serving in this capacity.   According to section 20 of the Act, the types of societies that may be registered under the Act include, but    are not limited to, the following Charitable societies; societies; Societies established for the promotion of science, literature, or the fine arts, For education; and Public art museums and galleries, and certain other types of museums. 
A non-governmental organization (NGO) is a legally constituted organization created by natural or legal persons that operates independently from any government. The term is usually used by governments to refer to entities that have no government status. In the cases in which NGOs are funded totally or partially by governments, the NGO maintains its non-governmental status by excluding government representatives from membership in the organization.
We offer NGO formation services to our clients, which meet the client\'s requirements and expectations completely. We have a team of highly qualified and experienced professionals, who have knowledge and expertise in solving all types of NGO formation issues and cases. Our policy is to enhance the customer satisfaction from first to last providing quality services to our clients meeting the client\'s requirements and expectations completely.

Procedure
The name(s) of the author(s) or settler (s) of the trust.
The name(s) of the trustee (s).
The name(s) if any, of the recipient/ whether it shall be the public at large.
The name by which the trust shall be known.
The name where it\'s primary and other offices shall be situate.
The property that shall devolve ahead the trustee(s) under the trust for the benefit of the beneficiary.
An intention to divest the trust property upon the trustee.
The objects of the trust.
The procedure for appointment, replacement or removal of a trustee. Their rights, duties and powers etc.

INTRODUCTION
As we already know that an NGO can avail income tax exemption by getting itself registered and complying with certain other formalities, but such registration doesn\'t provide any benefit to the persons making donations. The Income Tax Act has certain provisions which offer tax benefits to the \"donors\". All NGOs should avail the advantage of these provisions to attract potential donors. Section 35AC is one of such sections.

REGISTRATION UNDER SECTION 35AC
The Central Government approves certain NGOs and notifies them as eligible for project or schemes for the purposes of section 35AC. If an NGO succeeds in getting such an approval for its projects then it stands a very good chance of mobilising funds from the corporate and the business sector. Business houses making contribution to such approved projects are allowed the benefits of deducting such contribution as expenditure.

NATIONAL COMMITTEE
The Central Government has constituted a National Committee to identify projects and schemes to be notified under section 35AC, such committee normally consists of eminent persons. All NGOs are entitled to apply to the National Committee to get its projects or schemes approved.


WHERE THE APPLICATION IS TO BE MADE
The application for approval by the National Committee should be made to the Secretary, National Committee for Promotion of Social & Economic Welfare, Dept. of Revenue, Govt. of India, North Block, New Delhi - 110001.

 

THE APPLICATION AND ITS ENCLOSURE
i) The application is to be made in 2 Sets, written either in Hindi or English.
ii) Details such as name, address and status of applicant, the district/ ward circle where assessed/PAN number.
iii) Audited Balance Sheet, Profit& Loss Account or Income& Expenditure Account for the latest year and two preceding years.
iv) How is it constituted i.e. whether as a trust, society, etc supported by relevant documents like trust deed, rules & regulation, memorandum of association etc. and registration certificate, if any.
v) Name & Addresses of the persons managing the affairs of the association or institution, including those who left the organisation but were managing the affairs of the association or institution during the 3 years preceding the date of application.
vi) If the association or institution is notified under section 10(23)(C) or is approved for the purposes of section 80G, the particulars of such approval granted.
vii) Brief particulars of the activities of the association or institution during 3 years preceding the date of application or since inception if the association or institution is less than 3 years old.
viii) Such other information as the association or institution may like to place before the National Committee.

 

ADDITIONAL INFORMATION REGARDING THE PROJECT/SCHEME TO BE SUBMITTED
(i) Title of project or scheme;
(ii) Date of commencement;
(iii) Duration and the likely date of completion;
(iv) Estimated cost of the project ;
(v) Category or class of persons who are likely to be benefited from the project or scheme;
(vi) Affirmation that no benefit from the project or scheme other than remuneration or honorarium, will accrue to persons managing the affairs of the NGO ;
(viii) Such other particulars as the applicant may place before the National Committee.


CERTIFICATE TO BE ISSUED TO THE DONOR
All approved NGOs are required to issue a certificate to the donor for all contributions & receipts under section 35AC. The certificate is to be issued in Form 58A.
This certificate will enable the donor to claim exemption from its taxable income. Further, the NGOs should also send an Annual Report to the National Committee indicating the progress of the work relating to the project/scheme and the following informations in respect of each contributor :
i) name of the contributors & their addresses.
ii) PAN.
iii) amount of contributions.
iv) the project/scheme for which the contribution is made.
v) total amount of contribution received during the year.
vi) total cost of the project approved by the National Committee.
Such Annual Report should reach the National Committee by 30th June, following the financial year in which the amount is received.

 

DEDUCTION OF CONTRIBUTION UNDER SECTION 80GGA
Section 35AC is available to assessees who have income from the head ‘business\' or ‘profession\'. Therefore, for the assessees who do do not have income from business or profession, section 80GGA provides for deduction on donations made to eligible projects under section 35AC. Section 80GGA, is a broader section and deductions are also available for contributions made for scientific research under section 35CCA & 35CCB, which have been withdrawn. 100 per cent deduction is available under section 80GGA, subject to the available gross total income under section 80A. Therefore, unlike section 35AC, deduction under section 80GGA cannot be carried forward in the form of losses to next year .

OVERALL SUMMARY
To sum up the discussions :
i) Under section 35AC, organisations having income from business or profession can get 100 per cent deduction. Charitable Organisations can get registered themselves u/s. 5AC by applying to the National Committee under rule 11F to 11-O, if they are carrying on any business.
ii) The Central Goverment has specified various types of projects of national needs for which Charitable Organisations can make donations.
iii) Business houses making donations for the purpose of section 35AC, should be careful that the donee organisation continues to enjoy approval u/s. 35AC. As the approval under section 35(AC) is not permanent in nature.
iv) To get approval u/s. 35AC two sets of application have to be made alongwith specified enclosures to secretary of National Committee, New Delhi.
v) The National Committee may recommend or reject the project but when the approval is recommended then it is for a period of maximum 3 years and it could be further extended if the National Committee is satisfied with the performance during the period.
vi) A certificate has to be issued to the donor in Form 58A. This certificate will enable the donor to claim exemptions.
vii) The National Committee may withdraw the approval if the project is not carried out in accordance with the approved conditions. To withdraw a project National Committee should provide an opportunity of being heard to the aggrieved organisation.
viii) Section 35AC provides deduction from income from business and profession. Similar deduction is also available u/s. 80GGA, for assessees having income from other heads.

How to apply for 12A Registration of NGO - Income Tax Act 1961

When NGO organization get registered with Income Tax department, to claim tax exemption for their income, it gets the 12 A certification.

From the Date of establishment of an nonprofit ngo organization like trust, society or nonprofit company, it should apply for registration with Income tax department to get 12A certificate. If delayed in applying for registration then the nonprofit ngo organization should submit Audit Reports for the past three years or as may be available.

To get registered with Income tax department, Nonprofit NGO have to fill a form name FORM 10A and it have to produced to the Commissioner of Income Tax, Income Tax Department office where your NGO organization is location. If your NGO established in metropolitan cities like Delhi, Calcutta, Mumbai and Chennai, then you have to produce the FORM 10A to the Director of Income Tax (Exemption), Income tax department office. Before submitting FORM 10a, please make sure that you have received PAN CARD for your nonprofit ngo organization.

When you produce the form 10A to the above Income tax department, you have also required to enclosed the proofs and copies of the following. ( You can download the 10A form here to get 12A certification which is editable )

1. Original basic documents of organization, which evidencing the creation of the NGO should be enclosed, like Trust deed / Bye laws / Rules and Regulations / Memorandum and Articles of Association as per the shape of the nonprofit ngo organization.

2. Two copies of the Accounts of Three previous years should be enclosed. Where the NGO was not in existence in any of three prior years, copies of the accounts of for minimum years may also be submitted. 

After you have produced the above FORM 10A either through registered post with acknowledgement due or directly in the Income Tax office, The department will over look your application for fitness towards registration. It may also monitor your organization directly in person to know the genuinity of your ngo organization.

The Income tax officers have the rights to grant or to refuse registration to your application. If the Income tax office get satisfied with your proper documents and with the genuinity of your organization, then you will be certified. Even a 12a certified ngo organization, shall be rejected or cancel the grant by the Income tax department, if it feels your organization is not fit as per law at any time.

What Is section 80-G of Income Tax Act. ?
If an organization has obtained certification under section 80-G of Income Tax Act then donors of that NGO can claim exemption from Income Tax. This is not one time registration.  This needs to get renewed after validity period.
What is the validity period of the registration under section 80G of Income Tax Act?
80G registration : 1 to 3 years validity
What application forms are being used for applying for registration under section 80G of Income Tax Act?
80G registration: Form 10G (For New Application and Renewal both)


What are the conditions on Section 80G?
There are few conditions to be fulfilled under the section 80G:

  • The NGO should not have any income which are not exempted, such as business income. lf, the NGO has business income then it should maintain separate books of accounts and should not divert donations received for the purpose of such business.
  • The bylaws or objectives of the NGOs should not contain any provision for spending the income or assets of the NGO for purposes other than charitable.
  • The NGO is not working for the benefit of particular religious community or caste.
  • The NGO maintains regular accounts of its receipts & expenditures.
  • The NGO is properly 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

What is Tax Exemption limit on donations?
There is a limit on how much money can be exempted from the Income Tax.

  • There is a limit on how much money can be exempted from the Income Tax.
  • If the amount of deduction to a charitable organisation or trust is more than 10% of the Gross Total Income computed under the Act (as reduced by income on which income-tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), then the amount in excess of 10% of Gross Total Income shall not qualify for deduction under section 80G.
  • The persons or organisation who donate under section 80G gets a deduction of 50% from their taxable income. Here at times a confusion creeps in, that the tax advantage under section 80G is 50%, but actually it is not so. 50% of the donation made is allowed to be deducted from the taxable income and consequently tax is calculated.
  • The ultimate benefit will depend on the tax rates applicable to the assessee. Let us take an illustration. Mr. X an individual and M/s. Y Pvt. Ltd., a Company both give donation of Rs.1,00,000/- to a NGO called Adarsh. The total income for the year 2003-2004 of both Mr. X and Ms. Y Pvt. Ltd. is Rs. 2,00,000/-. Now assuming that the rates are 30% for the individuals and 40% for the Companies without any minimum exemption limit.

Documents required for registration u/s 80G:

  1. Dully filled in Form - 10A for registration u/s 12A registration;
  2. Dully filled in Form - 10G for registration u/s 80G registration;
  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. Evidence of welfare activities carried out & Progress Report since inception or last 3 years;
  8. Books of Accounts, Balance Sheet & ITR (if any), since inception or last 3years;
  9. List of donors along with their address and PAN;
  10. List of governing body I board of trustees members with their contact details;
  11. Original RC and MOA /Trust Deed for verification;
  12. Authority letter in favor of NGO Factory;
  13. Any other document I affidavit / undertaking I information asked by the Income Tax department

Where to apply for registration under section 12A and 80G of Income Tax Act?

Application for registration under section 12A and 8OG can be applied to the Commissioner of Income-tax (Exemption) having jurisdiction over the institution.

 

Can both the applicatlons under section 12A and 80G of Income Tax Act be applied together?

Yes ! Both applications can be applied together or it can also be applied separately also. If some organization is willing to apply both applications separately, then application for registration u/s 12A will be applied first. Getting 12A registration is must for applying application for registration u/s 80G of Income Tax Act.

Generally what is the timeline for getting registration under section 12A and 80G of Income Tax Act?

If application for registration under section 12A and 80G will be applied through NGO Factory, it should take 3 to 4 months.

 

What is the procedure for getting registration under section 12A and 80G of Income Tax Act?

Step-1: Dully filled-in application will be submitted to the exemption section of the lncome Tax Department.
Step-2: NGO will receive notice for clarifications from Income Tax Department in 2-3 months after applying.
Step-3: Reply of notice will be submitted by the consultant along with all relevant desired documents to the Income Tax Departments.
Step-4: Consultant will personally visit the Income Tax Departments to follow-up the case on behalf of the applicant organization.
Step-5: Exemption Certificates will be issued.

We are counted among the dependable providers of Foreign Contribution Regulation Act Registration Services based in India.
There are two ways of registration possible under FC(R) A.•Regular registration (Apply inform F.C 8) - under this registration, there is no restriction (either the total amount or from specific donor) for receiving Foreign Contribution.

Prior permission (Apply in Form F.C 1A) - under this registration, the permission is granted for a specific amount from a specific donor. A letter of intent from the donor to donate the amount must be enclosed along with the application form (Form F.C 1A).

Assistance in Registration of Society, Trust
Assistance in Registration of Society, Trust, 12a, 80g, FCRA, 35 act 1&2, 10(23),501 c(3).We provide services for 12A & 80G registrations for NGOs, Trust, Society and Non Profit Company.
Benefits

•12A Registration means Income of the society shall not be taxable. This is one time registration.

•80G Registration means Donor can claim exemption. This is periodic registration.

•Benefits in taking grants from Govt./Abroad/ other Agencies.

•Benefit in FCRA Registration.

Form Description 

FC-1 Intimation to the Central Government of receipt of foreign contribution by way of gift from relative.
FC-2 Application for seeking prior permission of the Central Government to accept foreign hospitality.
FC-3 Application for registration under section 11(1) of the Foreign Contribution (Regulation) Act, 2010 for the acceptance of foreign contribution by an Association having definite cultural, economic, educational, religious or social programs.
FC-4 Application for prior permission under sub-section (2) of section 11 of the Foreign Contribution (Regulation) Act, 2010 (42 of 2010) for the acceptance of foreign contribution by an Association having definite cultural, economic, educational, religious or social programme.
FC-5 Application for seeking renewal of registration certificate under section 13 of the Foreign Contribution (Regulation) Act, 2010 (42 of 2010).
FC-6 Yearly account of Foreign Contribution received and utilised.
FC-7 Intimation about Foreign Contribution (Articles) Account.
FC-8 Intimation about foreign contribution (securities) Account.
FC-9 Intimation to the Central Government of Receipt of Foreign Contribution received by a candidate for Election [section 21 of the Foreign Contribution (Regulation) Act, 2010 (42 of 2010).
FC-10 Application for seeking permission for transfer of foreign contribution to other registered/un-registered persons.
Correction Form Application form for change in Name/Address of Associations.
Correction Form Application form for change in Bank Account/Bank of Associations

Atijeevan Foundation
www.atijeevanfoundation.org
2013-10-27, 10:52
Atijeevan Foundation would thank Kind Heartz for all the help and support they have provided us in our various endeavors. Atijeevan is a non governmen...
Rudra Prasad
2013-10-27, 10:55
Well done... go ahead to Serve d Needy... Thanxxx