Section 12A of Income Tax

Section 12A of the Income Tax Act, 1961, provides tax exemptions to registered non-profit organizations, trusts, and institutions that work for charitable or religious purposes. To qualify, these entities must register under Section 12A and meet specific eligibility criteria.

Key Benefits:

- Tax Exemption: Registered organizations are exempt from paying income tax on their surplus income.
- Accumulation of Income: They can accumulate up to 15% of their income for future use without paying taxes.
- Grant Eligibility: Registration under Section 12A makes organizations eligible to receive grants from government and other agencies.

Eligibility Criteria:

- Charitable Purpose: The organization must be established for charitable purposes, such as education, medical relief, or environmental conservation.
- Non-Profit: The organization should not work for profit but for the welfare of society.
- Registration: The organization must register under Section 12A.

Registration Process:

1. Online Application: File Form 10A on the income tax portal.
2. Document Submission: Provide required documents, including registration certificates, PAN card, and bank statements.
3. Verification: The Principal Commissioner or Commissioner verifies the application.

Important Points:

- Audit Requirement: Organizations with income exceeding ₹2.5 lakh must maintain audited financial records.
- Revalidation: Registration is valid for five years and requires revalidation.
- Tax Implications: Failure to comply with regulations can result in tax liabilities