12A Registration (Now Section 332) for Charitable Trusts and NGOs
Charitable trusts, non-profit organisations/non-government organisations (NPOs/NGOs), welfare societies, religious institutions, and Section 8 companies must register with the Income Tax Department to claim tax exemption on their income. From 1 April 2026, this registration is under section 332 of the Income-tax Act, 2025 (earlier section 12A/12AB of the Income-tax Act, 1961) and is still commonly called 12A registration.
Under the 1961 Act, section 11 exempted income from property held for charitable or religious purposes, and section 12 covered voluntary contributions (donations). Under the Income-tax Act, 2025, both form part of the ‘regular income’ of a registered non-profit organisation (section 335), which is exempt when applied to its objects as required.
Importance of Section 12A Registration
If a particular entity engaged in welfare activities is not registered under Section 12A, its receipts or financial dealings will come under the tax purview. To cite an example, consider that an NGO received a Rs 10 lakh donation from an individual as a voluntary contribution. If this particular NGO is not registered under Section 12A of the ITA, such an amount received as a donation will not be exempted from tax. Instead, they will be liable to pay tax as prescribed in the IT Act on the total amount received.
Key Compliance Rules for Registered Trusts and NGOs
- Maintenance of books of accounts: If the total income of trusts, NGOs, or welfare institutions (before claiming the exemption) exceeds the basic exemption limit, they are required to maintain books of accounts and other documents in such form and manner and place as may be prescribed as per the income tax rules (section 347 of the Income-tax Act, 2025; introduced by the Finance Act 2022). Earlier, there was no specific reference regarding the maintenance of books of accounts.
- Audit: If the income (before exemption) exceeds the basic exemption limit, the accounts must be audited and the audit report filed online one month before the due date of the return. This is Form No. 10B/10BB for years up to FY 2025-26 and Form No. 112 (section 348 of the Income-tax Act, 2025) from tax year 2026-27.
- Period of the utilisation of accumulation: At least 85% of the trust’s income must be applied towards its objects in the year, and up to 15% can be set apart. Any shortfall becomes taxable unless it is accumulated for a specific purpose for up to 5 years by filing Form 10 (Form 109 from tax year 2026-27) within the prescribed time. Amounts not used within that period become taxable.
- Application of income to be reckoned only on payment basis: Expenses count as ‘application of income’ only in the year in which they are actually paid, so trusts/institutions should pay a year’s expenses by 31 March to count them in that year.
- New tax rate prescribed for prescribed incomes: Specified incomes (outcomes of violations such as accumulation of funds for prohibited purposes, partial application of accumulated funds and provisions of excessive benefits to trustees, among others) would be taxable at a flat rate of 30% without reduction of any expenditures/allowances or set-off of losses.
- Earlier, the Finance Act 2020 introduced certain amendments which mandate that charitable institutions are required to re-apply for registration. This came into effect on April 1, 2021. The process aimed to ensure that the charitable activities of such trusts, social welfare organisations, or NGOs are genuine. Under this system, new trusts first get provisional registration for 3 years without detailed inquiry. They then apply for regular registration, which is valid for 5 years (10 years if total income is up to ₹5 crore in each of the two preceding years) and must be renewed.
Documents Required For Registration Under Section 12A Of ITA
The following set of documents are required while applying for a registration under Section 12A:
- Copy of registration with the registrar of companies (ROC)/public trusts/firms or societies
- Know your customer (KYC) details of members
- PAN card details of the trust, society, or institution
- Copy of a utility bill of the registered office, rent agreement and no-objection certificate (NOC)
- Self-certified copy of the establishment of a trust or social welfare organisation
- Note which provides complete details of the activities of such organisations
- The self-certified document, which highlights order granting registration under Section 12A, Section 12AA or 12AB as the case may be
- Suitable proofs that support documents of the establishment of the trust or society
- Suitable proofs that support charitable activities undertaken.
- Self-attested document copies of the annual financial account of the trust or society
- Self-certified copy in case of an application or notice of rejection order as the case may be
Process For Online 12A Registration Using Form No. 104 / 105
12A registration is not a one-time process. It is valid for a fixed period and must be renewed at least six months before it expires. New trusts and NGOs apply online for provisional registration in Form No. 104 (earlier Form 10A). Regular registration and renewal are applied for in Form No. 105 (earlier Form 10AB) to the Principal Commissioner/Commissioner of Income Tax (PCIT/CIT).
- Log in to the income tax portal: www.incometax.gov.in
- Choose 'e-File' tab, click on 'Income Tax Forms' and go to 'File Income Tax Forms' option
- Search for and select ‘Form 104’ (or ‘Form 105’ for regular registration or renewal)
- Choose the relevant year from the drop-down menu
- Select the 'Prepare and Submit'
- Key in the details mentioned in Form No. 104 (or Form No. 105) and attach relevant attachments
- Submit the form using a digital signature certificate (DSC) or electronic verification code (EVC)
Benefits Under Section 12A
One of the benefits of 12A registration is that a trust, NGO, or institution pays no tax on its income if it applies at least 85% of that income to its charitable or religious objects in the year. Up to 15% can be set apart for future use, subject to conditions. The income cannot be used for the personal benefit of trustees or related persons.
12A registration, along with 80G, is required to receive CSR funds from companies, and many government grant schemes also ask for it. However, private or family trusts cannot avail of exemptions under Section 12A.
Section 12A Registration across Chennai