Updated on April 14, 2025 04:44:00 PM
Under the Income Tax Act, in India, trusts functioning for charitable purposes enjoy 12A and 80G registrations. These are tremendous tax benefits enjoyed by the trusts. These recognitions give an identity to the charitable nature of the trust so that it may function more efficiently and attract finances from people.
12A Registration is a must for trusts to gain income tax exemption on their surplus funds. The trust, after registration under 12A, is exempt from paying income tax on the income generated by it, provided that the funds are used only for charitable activities. This helps the trust allocate more resources toward fulfilling its social objectives.
80G Registration on the other hand provides tax benefits to donors giving to the trust. A donor can deduct from his tax for the contributions given, which depends on the type of the trust, whether it is 50% or 100%. Such a measure would encourage donations to the trust as more and more people, corporate, and philanthropic agencies would support it.
These, both 12A and 80G, enhance the creditability of trust. They facilitate legal compliance coupled with financial viability, which adds strength to their cause and thereby aids the mission while furthering society's impact as a whole.
Table of Content
12A and 80G registrations are granted to trusts in India for operating charitable causes under the Income Tax Act. The registrations not only enhance the credibility of a trust but also encourage donations through the financial benefits bestowed upon the donors.
12A Registration of Trust 12Aregistration would permit a trust to be classified as a charitable trust and income tax exemption, in the case that the income earned is applied to charitable or non-profit purposes. This would qualify the trust for tax exemption and legality under the Income Tax Act. Only once registered under 12A, with its income not being taxable, if the funds are used according to the charitable purpose of the trust.
80G Registration for Trust 80G registration allows the trust to provide tax deductions to its donors. A donor can claim a tax deduction of up to 50% or 100% of the donation amount depending on the category of the trust, if the donor is giving to an 80G-registered trust. This encourages people to give donations and increases the chances of getting donations because the donor's taxable income is reduced.
In India, registration under the provisions of 12A and 80G is an important certification for non-profit organizations like Trusts that allow such organizations to work much more efficiently in fulfilling their objectives. Here are ways in which these registrations aid such organizations::
To apply for 12A and 80G registration for Trusts must provide specific documents to establish their eligibility and compliance. Below is a comprehensive list:
Applying for 12A and 80G registration for Trusts involves a streamlined online process through the Income Tax Department’s e-filing portal. Here is a step-by-step guide:
There are no fees levied by the Income Tax Department for the 12A and 80G registration process for Trusts
| Category | Details | Approximate Cost (₹) |
|---|---|---|
| Government Fees | No direct fees for Form 10A (12A) or Form 10G (80G) | ₹0 |
| Document Preparation | Auditing, drafting financial statements, and legal documents | ₹5,000 – ₹15,000 |
| Follow-ups and Representation | Additional charges for handling queries or objections | ₹5,000 – ₹10,000 |
| Total Estimated Cost | Combined cost for professional and other services | ₹10,000 – ₹50,000 |
Note: Although the fee is variable, the entire cost will depend upon the level of applicability and the requirement for professional aid.
Validity of 12A and 80G registration for trusts, as amended by the Finance Act, 2020, depends on timely compliance. Newly founded trusts receive provisional registration for 3 years, whereas existing trusts must renew their registration every 5 years. Trusts with 12A/12AA and 80G registrations before April 1, 2021, were needed to re-register under the updated laws by March 31, 2022, using Form 10A for initial or provisional registration and Form 10AB for renewal.
Conclusion
12A and 80G registrations are vital for trusts because they help to ensure both legality and monetary benefits in the context of conducting business in India. 12A registration gives a trust exemption to apply income tax on its surplus funds it can then be used to channel more resources toward the achievement of the trust's goals. 80G registration encourages donation by giving donors relief under the tax act, this means enhancing the ability to raise funds and support the trust's mission. These registrations increase the credibility and transparency of the trust, while also promoting public confidence to give more contributions by individuals and corporations.
At Professional Utilities, we leverage our industry knowledge and expertise to help businesses navigate complex regulations, minimize risks, and optimize operations for maximum efficiency and profitability.
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Frequently Asked Questions (FAQs)
12A registration grants a trust tax exemption on income earned through its charitable activities. It allows the trust to avoid paying income tax on surplus funds used exclusively for charitable purposes.
80G registration allows donors to claim tax deductions on their donations to the trust. Depending on the trust's category, donors can deduct 50% or 100% of their donation from taxable income, making charitable contributions more attractive.
Yes, 12A registration is required for a trust to receive income tax exemptions on its earnings and to operate as a recognized charitable entity under the Income Tax Act.
Yes, a trust can apply for both 12A and 80G registrations simultaneously. However, the trust must first obtain 12A registration before it can be eligible for 80G registration.
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