Trusts, Societies, or Section 8 companies do charitable or religious work and are often called NGOs or NPOs in general terms. i.e. they are non-profit or non-government organizations working for the welfare of the general public with no profit motive.
India is a vast country with a majority of the population suffering from poverty, illiteracy, and under-development.
There are a large number of NGOs/NPOs working in India in the field of relief to the poor, environmental protection, education, medical, or any other matter of general public utility.
These NGOs are generally registered as :
(1) Trusts
(2) Societies or
(3) Section 8 company under Companies Act
However, the registration under the above category does not give them the immunity of Income-tax from the surplus, etc. which they derive. They have to be necessarily registered under Income Tax Act so that there is no tax on the income or surplus which they generate during a year.
The provisions relating to their registration under Income Tax is provided under Section 12.
Recently there has been a complete change in the procedure of registration of these Trusts/Societies etc. w.e.f. 1st April 2021.
Here we will discuss all the new provisions of registration of NGOs under Income Tax and also guide you on how to obtain the registration.
First we look at the Income Tax act as to what has changed regarding the registration of these NGOs.
The significant changes are as under :
1. Before the amendment w.e.f. 01st April,2021, all the NGOs who were already registered under Income Tax Section 12A were granted registration which was effective for lifetime i.e. until and unless it is not canceled by the Income Tax Authority, they were not required to re-register.
2. From 1st April,2021, a new section 12AB has been introduced in which there is a complete change in the registration formalities of these NGOs. These are :
(a) Every Trust/Society/Section 8 company who has already been registered u/s 12A of the Income Tax Act will have to re-apply for registration within 3 months from 1st April 2021 i.e. up to 30th June 2021.
(b) Any new NGO who has not been registered earlier and wishes to apply afresh will only be granted provisional registration and that too for a period of 3 years and will have to re-apply after three year for registration or after commencement of its activities whichever is earlier.
(c) The registration granted will be for a period of 5 year only and it has to be renewed again for a period of 5 years on expiry of the same.
(d) The application for renewal of registration i.e. on expiry of 5 years will have to be made before 6 months from the end of the period.
(e) The order for registration of the NGO will be passed within 3 months from the end of the month in which application has been made in case of those NGOs who are already registered before the amendment. In other cases, the time limit of passing of order will be 6 months. In case oNGOs applying again after 5 year or NGOs who have been granted provisional registration, the Principal commissioner will call upon all the relevant information and documents so as to satisfy that the NGO is genuine and the activities are being carried out in proper way. Only after being satisfied, the registration will be renewed. In case of dissatisfaction, the application can be rejected. Before rejection of the application, proper opportunity of being heard will have to be provided to the NGOs.
Now we look at the rules being framed regarding the procedure of registration of NGOs.
In this respect, rule 17A has been inserted which provides the following procedure for registration of NGOs.
It states that :
1. Any NGO/Trust/Society/Section 8 company who is already registered before 1st April,2021 or applying afresh i.e. new NGOs have to make an application for registration in Form No. 10A.
2. Any other NGO not falling in above category has to apply in Form No. 10AB.
3.The application in Form 10A or 10AB shall be made along with the following documents to be attached :
(a) Trust Deed or Instrument through which the NGO has been created - Self Certified
(b) Registration Certificate of Trust/Society/Section 8 Company - Self Certified
(c) Copy of Registration Certificate of FCRA - Self Certified (if the NGO is registered under that Act)
(d) Copy of Registration Certificate under 12A of Income Tax - Self Certified
(e) Copies of Annual Accounts of the NGOs if they are in existence before the year in which application for registration has been made (up to 3 years) - The same is not required in the case of already registered NGOs
(f) In case of objects have been changed or modified, a document evidencing the same
(g) Notes on the activities
4. Form No. 10A or 10AB shall be furnished online by logging into the Income-tax website (www.incometaxindiaefiling.gov.in) and is to be e-verified or digitally signed.
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