The Finance Act, 2020, introduced the new concept of 12A Registration under Income Tax Act of all existing and new charitable trusts, institutions and NGOs. Therefore, Existing registered trusts, entities, and NGOs were required to convert to the new registration system under Section 12AB.
The Income Tax Authority has granted provisional registration to trusts and other non-profit organizations. The purpose of this registration is to exempt them from paying income tax. After incorporation, 12A registration can generally be applied for. Section 8 Corporations, trusts, and NGOs that have obtained 12A registration are exempt from paying income tax on their excess income. Furthermore, 12A registration is available for all nonprofit entities. Therefore, it is necessary for all trusts, NGOs and other nonprofit organizations to know Section 12A of the Income Tax Law.
Section 12A Prescribes the conditions for availing the benefits under section 11 and 12.
Section 12AB Prescribes the procedure framework for registration. In addition, It also prescribe the procedure to avail the exemption under section 11 and 12. (introduced w.e.f AY 2022-2023).
Form 10A Prescribes the procedure framework for registration. In addtion, It also prescribe the procedure to avail the exemption under section 11 and 12. (introduced w.e.f AY 2022-2023).
One of the main features of the new registration procedure is that provisional registration is possible for a period of three years without detailed examination by the prescribed income tax authority, even if the activity of the company has not yet started.
Step 1: The applicant (a trust, corporation or other institution) must apply for registration through the Income Tax Portal using its income tax filing information in Form No. 10A (or 10AB). The applicant must submit other documents as listed above in this article.
Step 2: On receipt of an application in Form No. 10A (or 10AB as the case may be), the Principal Commissioner or Commissioner, authorized by the Board:
In case of applicant who is already registered u/s 12AA or in case of Provisional Registration where Form 10A has been submitted. Order in writing has been passed for granting registration in Form No. 10AC. 16 digit alphanumeric Unique Registration Number (URN) also issued to the applicants.
In other cases i.e. where Form 10AB has been submitted. The order of registration or rejection or cancellation of registration shall be passed in Form No.10AD. 16 alphanumeric number Unique Registration Number (URN) shall be issued, if the registration is granted.
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