NGOs have multiple options to select the form of constitution, like trust, society and section 8 company. In order to claim exemptions under section 11 & 12 of Income Tax Act, 1961, it is mandatory for all NGOs to get registration under section 12A of the act. “It is important to note here that notwithstanding the fact that trust, society and section 8 companies are registered as per their respective acts, the registration under section 12A is necessary to claim exemption under Income Tax Act.”
Earlier registration under 12A was given as one time registration and once the registration is granted it will held good it cancellation. From 1st October 2020, all new registration will be given for 5 years only and organisation has to apply for renewal after each 5 years.
An application for fresh registration under section 12A will be given to Principal Commissioner or Commissioner, as per provisions of section 12AB. A provisional registration for 3 years will be given to organisations. The registration once granted shall be valid for three years from the Assessment Year from which the registration is sought. Application for renewal of such new registration needs to be submitted
whichever is earlier.
The registration so granted shall be valid for 5 years and further needs to be renewed after each 5 years of time.
Important Note: In cases of new registration, application shall be submitted, at least one month prior to the commencement of the previous year relevant to the assessment year for which registration is meaning thereby new NGO will not be entitled to have the benefit of registration of section 12AB in the first year of operation.
All registered NGOs are required to apply for re-validation within three months from 1st October 2020. Registration so re-validated shall be valid only for 5 years. The application for the renewal of registration (after five years) needs to be submitted at least six months prior to the expiry of validity period.
Where any organisation’s registration has become non-operative due to simultaneous exemptions in various other sections [10(23C)] in that case it has to reapply under section 12AB. The registration will be given for 5 years, has to be renewed in every five year. The application to be submitted at least 60 months prior to expiry of registration.
Where an organisation has been granted registration and subsequently there is change or modification of objectives of that organisation then in this case it has to re-apply for registration with modified or changed objectives under section 12AB. The registration will be given for 5 years, has to be renewed in every five year. The application for registration shall be submitted within 30 days from such change in objectives.
In order to claim exemption, an NGO should make an application to the Principle Commissioner or Commissioner of Income Tax in Form 10A. It has also been provided that the Form No. 10A shall be furnished electronically under digital signature (DSC), if the return of income is required to be furnished under digital signature or through electronic verification code (EVC) The following documents are required to be submitted: