How to Apply for 12A and 80G Registration after Section 8 Company

Completing the Section 8 company registration is the first significant step in setting up a non-profit organization in India. This registration allows the entity to legally operate as a company dedicated to promoting charitable, educational, religious, or social welfare objectives. However, to further enhance the organization’s financial standing and credibility, it is essential to obtain 12A and 80G registration. These registrations provide significant tax benefits and help attract more donations from individuals and organizations.

In this comprehensive guide, we will explore how to apply for 12A and 80G registration after completing Section 8 company registration, including the documents required, the step-by-step process, and the benefits of these registrations.

What is Section 8 Company Registration?

A Section 8 company is a non-profit organization registered under the Companies Act, 2013. Its main purpose is to promote charitable, educational, social, cultural, or environmental objectives rather than earning profits. Section 8 companies cannot distribute dividends to their members, and the income generated by such companies must be used to promote their primary objectives.

The Section 8 company registration process involves filing the required documents with the Registrar of Companies (RoC) and obtaining a license to operate as a non-profit entity. Once registered, the company can focus on its goals, such as social welfare, education, or environmental sustainability. However, to maximize its financial resources and take advantage of tax exemptions, the next logical step for a Section 8 company is to apply for 12A and 80G registration.

Importance of 12A and 80G Registration

12A Registration:

12A registration allows the organization to claim exemption from paying income tax on the surplus income generated from its charitable activities. Without this registration, even non-profit organizations are required to pay tax on their earnings. By obtaining 12A registration, the organization’s funds are preserved for its primary goals, rather than being eroded by tax liabilities.

80G Registration:

80G registration provides a tax deduction to donors who contribute to the organization. Donors can claim a deduction of 50% of the amount donated, which encourages more people and organizations to donate. This not only helps in raising funds but also increases the credibility of the organization among donors.

Both 12A and 80G registration are crucial for the financial health of a non-profit organization. These registrations enhance the credibility of the organization, making it easier to attract donations and grants from individuals, corporates, and government bodies.

Eligibility for 12A and 80G Registration

To apply for 12A and 80G registration, the organization must first be registered as a non-profit entity under Indian law. This includes:

Section 8 companies
Charitable trusts
Societies

Since this article is focused on Section 8 companies, it’s important to note that after completing the Section 8 company registration, the entity becomes eligible to apply for these tax benefits.

Step-by-Step Process to Apply for 12A and 80G Registration After Section 8 Company Registration

After successfully completing the Section 8 company registration, follow these steps to apply for 12A and 80G registration:

Step 1: Prepare the Required Documents

Before starting the application process, ensure that you have the necessary documents in order. Here’s a checklist of the documents you will need:

Incorporation Certificate: This is the certificate you receive upon completing your Section 8 company registration.
PAN Card: The organization’s PAN card is a mandatory requirement.
MoA (Memorandum of Association) and AoA (Articles of Association): These documents outline the objectives and functioning of the Section 8 company.
Audited Financial Statements: If your organization has been operational for three years or more, you will need to provide audited financial statements for those years. For newly registered organizations, financial statements are required from the date of registration.
Activity Report: If applicable, a report detailing the activities of the organization over the past three years should be submitted.
Donor List (for 80G registration): A detailed list of donors and the amounts they have contributed can help in obtaining 80G registration.

Make sure all documents are properly organized and ready for submission.

Step 2: Submit Application Online

To apply for 12A and 80G registration, the application must be submitted online through the Income Tax Department’s e-filing portal. Here’s how to do it:

Register on the Income Tax Portal:
- Visit the official e-filing portal (https://www.incometax.gov.in).
- If your Section 8 company is not already registered, you will need to create an account using the organization’s PAN number.
Fill in Form 10A for 12A Registration:
- After logging in, navigate to the section for applying for 12A registration and fill out Form 10A.
- This form requires you to provide details about the organization’s objectives, financials, and activities.
- Attach the necessary documents such as the incorporation certificate, PAN card, and financial statements.
- Once completed, submit the form electronically.
Fill in Form 10G for 80G Registration:
- To apply for 80G registration, you will need to fill out Form 10G after completing the 12A application.
- This form includes details about the organization’s objectives and the nature of donations received.
- Submit this form along with the relevant documents.
Verification:
- After submitting both forms, you may be required to verify the application using the organization’s DSC (Digital Signature Certificate) or through EVC (Electronic Verification Code).

Step 3: Review by the Income Tax Department

After submission, the Income Tax Department will review the application and may ask for additional documents or clarifications. The process typically takes 3 to 6 months for approval. If everything is in order, you will receive the approval for 12A and 80G registration, which will be valid for the organization’s lifetime unless revoked or canceled.

Benefits of 12A and 80G Registration

12A and 80G registration provide a range of benefits for Section 8 companies and their donors:

Tax Exemption for the Organization: With 12A registration, any income generated by the organization for its charitable activities is exempt from income tax. This allows the organization to retain more funds for its operations and social objectives.
Increased Donations with 80G: With 80G registration, donors can claim a tax deduction of 50% on the donations they make to your organization. This tax benefit encourages more people and corporates to contribute, resulting in increased funds for your charitable work.
Credibility and Trust: Organizations with 12A and 80G registration are perceived as more credible and trustworthy by the public, donors, and even government bodies. This opens doors for grants, CSR funding, and collaborations with larger organizations.
Financial Transparency: Obtaining 12A and 80G registration also requires the organization to maintain transparent financial records, which helps in building a strong foundation of trust with stakeholders and the public.

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Conclusion

For any non-profit organization, especially after completing the Section 8 company registration. Obtaining 12A and 80G registration is essential for maximizing the organization’s potential and financial resources. These registrations not only provide significant tax exemptions but also make it easier to attract donations and build credibility with stakeholders.

By following the steps outlined above, you can smoothly apply for both 12A and 80G registration and ensure your organization is fully equipped to carry out its charitable mission without the burden of unnecessary taxes. Make sure to keep all documents in order and follow the online process diligently for a successful application.

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