12 A REGISTRATION
(Section 12 A of Income Tax Act 1961)
The activity of an NGO is towards the society and is normally for public utility
and charitable purpose. It is very difficult if not possible to arrange funds for
such noble work. It is precisely because of this income of NGOs are normally exempted
from Income Tax. However, there are certain rules and regulations and guidelines
which an NGO must follow to get such exemption.
The most important rule relating to this is registration of the NGO under the Income
Tax Act. Section 12A of the Income Tax Act deals with application for registration.
NGO can get exemption from tax on NGO’s income under section 12A. Income of an
organization is exempted if NGO has 12-A registration. All income shall not be taxable
after 12-A registration. This is one time registration. If the NGO is not registered,
income tax is payable on surplus during the year.
This exemption is available for all non-profit NGOs. Unfortunately, many NGOs have
not applied for this even after 10-15 years of working. This delay can be forgiven
if you apply with sufficient reasons.
When to apply
Application for registration under section 12A can be applied just after registration
of the NGO.