80G and 12A Registration
Both 80G and 12A are crucial registrations under the Income Tax Act of 1961 for NGOs and charitable organizations in India. They offer distinct benefits related to tax exemptions and attracting donations. Here's a breakdown:
Section 12A Registration:
- Purpose: This registration grants an NGO exemption from paying income tax on its income. This means that the income earned by the NGO through donations, grants, or other sources will not be taxed.
- Benefit to NGO: It allows the NGO to utilize its funds more effectively for its charitable activities, as it doesn't have to allocate a portion for income tax.
- Eligibility: Any NGO or charitable organization established for charitable or religious purposes can apply for 12A registration.
- One-time Registration: It's a one-time registration and generally doesn't require renewal unless there are significant changes in the organization's structure or activities.
Section 80G Registration:
- Purpose: This registration provides a benefit to donors who contribute to eligible NGOs. It allows donors to claim a deduction from their taxable income for the donations they make.
- Benefit to Donors: By claiming a deduction under Section 80G, donors can reduce their tax liability, effectively incentivizing charitable giving.
- Benefit to NGO: It makes the NGO more attractive to potential donors, as they can receive a tax benefit for their contribution.
- Deduction Limit: The deduction allowed under Section 80G is usually 50% of the donation amount, but in some cases, it can be 100%.
- Eligibility: NGOs that are registered under Section 12A and fulfill certain other conditions can apply for 80G registration.
Key Differences:
| Feature | Section 12A | Section 80G |
|---|---|---|
| Benefit to | NGO | Donors |
| Purpose | Income tax exemption for NGO | Tax deduction for donors |
| Nature | One-time registration | May require renewal |
| Eligibility | Basic registration for NGOs | Requires 12A registration and other conditions |
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