Licenses under section 80G and 12A are issued by the income tax departments to companies or Trust or societies having charitable objects.
The certificate is issued to encourage donors to donate funds into Non Profit organisations for the welfare of the society.
By donating into these organisations holding 80G or 12A licenses, the donor can claim tax exemptions under section 80G or 12A of income tax Act 1961.
The Authority to issue license to the organisations is under the Commissioner of Income-tax (Exemption).
The Applicants registered under section 80G or 12A are not allowed to use any profit from income or expenses of the company fore their owm personal or business purposes.
Conditions for availing 80G and 12A License
Charitable organisations and NGOs must fulfil the following conditions before applying for 80G and 12A License :
- Any income generated shall not be used for any kind of business.
- The trustees or any other body governing of the organization shall not derive any undue benefits from the funds of the organisation
- The asset or income held by the organizations should not be used for other than the purpose of making charity
- The organisation must maintain a separate Bank Account for receiving donations, grants, etc.
- The organisation should not be working for the benefit of any particular caste or religion
- The organisation shall maintain a regular book of accounts in favour of the receipts and expenses.
- The organisation should registered in either of the following ways: Section 8 Company charitable trust or a registered society.
Documents Required for obtaining 80G License
The following documents shall be required for obtaining License under section 80G :
- Registration Certificate of the entity i.e Memorandum of Association in case of Section 8 companies, Registration certificate in case of Societies and Trust Deed in case of a Trust
- Copy of Income Tax Returns and the Book of Accounts of the past three years
- Copy of Proof of Address of registered office of premises along with No objection certificate from the owner of the property.
- Copy of Utility Bills such as Electricity bill, water bill or House Tax Receipt
- A detailed list of the Board of Trustees
- Donors list along with their PAN and address
- Details regarding the activities for welfare of its objects being carried out & the progress report of the last three years
- Form 10G
- Copy of the PAN of the Section 8 companies or Trust or society
- Copy of Registration Certificate or Memorandum of Association or Trust Deed.
Documents Required for obtaining 12A Registration
The following Additional Documents shall be required for obtaining License under section 12A :
- Registration Certificate of the entity i.e Memorandum of Association and Articles of Association in case of Section 8 companies, Registration certificate in case of Societies and Trust Deed in case of a Trust
- Form 10A.
- bank account statement for last three years
- PAN of the Company, Trust, Society
Process for Applying for 80G License
The Process for obtaining 80G License is as follows :
- Application to Commissioner of Income Tax : The Applicant shall apply to the Commissioner of Income Tax (Exemption) within the jurisdictional area of the entity along with the required documents.
- Inspection by Income Tax Department :After receipt of Application, the Income Tax department shall do on-premise inspection,
- Submission of Additional Documents : The Income tax office after inspection of documents and premises may call for additional documents. The Applicant must submit the documents as required by the income tax officer.
- Issue of License : The income tax officer, upon satisfactory verification of documents and the office of the company, trust or society whatever it is, shall grant License.
Process for Applying for 12A License
The Process for obtaining 12A License is as follows :
- Application for License : The Applicant Company, Trust or society shallmake an application in the Form 10A to the Jurisdictional Commissioner of Income Tax (Exemptions) according to the prescribed guidelines..
- Scrutiny of Application : The Jurisdictional Commissioner of Income Tax (Exemptions) after receipt of Application for registration verifies the genuineness of the activities of the organization, He may call for any additional information, if he considers necessary.
- Issue of License or rejection of Application : After scrutinizing the Application, if the Commissioner is satisfied that the Applicant fulfils the criteria, then he shall pass an order in writing for the grant of 12A Registration. However, If the Commissioner is not satisfied he will reject the application, after giving the applicant an opportunity of being heard.
Cancellation of Licenses under section 80G or 12A
The Concerned Authorities may cancel the Licenses under section 80G or 12A, if they found any of the following :
- The organization is indulged in any activity that is against the object of the institution
- The activity of organisation is benefitting a specific religion or caste
- The income of the institution is used for the benefit of specific individual or group of persons
- The funds of the organisation are being invested in any prohibited activity.
- The organization is indulged in any activity that is not genuine
Q 1 Where to apply for 80G and 12A License?
Ans: For obtaining License under 80G and 12A, the applicant shall make an applicant to Commissioner of Income-tax (Exemption) having jurisdiction over the institution.
Q 2 How long it takes to get License under Section 80G or 12A?
Ans: The process for getting license under section 80G or 12A may take around 120 to 150 days.
Q 3 What is the Validity for licxense under section 12A or 80G?
Ans:. The license granted under section 12A shall be valid for lifetime, provided the applicant shall not indulge in any prohibited activity.
The license granted under section 80G shall be valid on the period as prescribed on the certificate. Generally it is 1 to 3 years.
Q 4 Can application for both 80G and 12A License can be applied together?
Ans: Yes, Both the Applications can be applied together to the Commissioner of Income-tax (Exemption) having jurisdiction over the institution.
But one should keep in mind that the application for license under 12A must be applied first.