The Finance Act 2020 had made significant changes to the governance framework for existing as well as new NGOs in India.

New provisions introduced by the Finance Act, 2020 have removed the concept of perpetuity and have provided that even existing organizations registered u/s 12A / 12AA OR 80G of the Income Tax Act would have to apply for registration u/s 12AB of the Finance Act 2020.

REGISTRATION U/S 12 AB
Validity of registration granted u/s 12 AB of the Act :

• The registration granted under section 12AB will remain valid for 5 years.
• However, in the case of Provisional registration, it shall be valid for 3 years.

Benefits of Section 12AB Registration:

• Income will be exempted from taxation.
• Benefits in taking grants from government / abroad / other agencies.
• Benefits in FCRA registration.

Terms and Conditions for Section 12AB Registration:

• All the existing registered trusts under the section 12A or section 12AA would move to new provision section 12AB.
• Newly established trusts and institutions applying to income tax for registration for the very first time will be given provisional registration for three years.
• The provisional registration will be valid for three years.
• Prior to 6 months from the completion of three years provisional registration, an application for renewal of provisional registration or rather registration has to be made.
• All the registrations under Section 12A or 12AA once done, will be required to renew their registration at the interval of every 5 years.
• After processing your application, your trust or institution’s registration under section 12AA and 80G may be re-validated by income tax for a period of 5 years.
• Proof of Address where the registered office of the society will be located
• Self-Declaration by the president of the proposed society.

What is Section 80G?
80G Registration under Section 80G of Income Tax Act provides benefits to the donor of an NGO. The donor gets financial benefits in his taxable amount of their income.

Benefits of Section 80G(5) Registration

• Registration under section 80G(5) of the Income Tax Act provides benefits to NGOs.
• If NGO has 80G(5) certificate with them, donor gets financial benefit in his/her taxable amount of their income.
• If an NGO gets itself registered under section 80G(5) then the person or the organization making a donation to the NGO will get a deduction of 50% from his/its taxable income.
• By availing 80G(5) Certificate, NGO can attract more donors.

Documents required for Section 12AB and 80G Registration:

• Company / Trust / Society registration certificates / registration documents
• Copy of PAN card of the directors / trustees
• Copy of Aadhaar Card of the directors / trustees
• Digital signature of one of the directors / trustees
• By Laws of this company, AOA, MOA copies
• Audit reports for all financial years since incorporation
• Audited Financials for all financial years since incorporation
• Such other Documents as may be required by Regulatory Authority