What is 80G Certificate?
80G Certificate is issued under Income Tax Act, 1961 to NGO’s by Income Tax Department.
The primary objective behind the grant of 80G Registration is to motivate more donors to the organizations for donating funds.
Furthermore, the donors receive a 50% tax exemption on his total taxable income. To avail this exemption, the donor must attach the stamped receipt against the donation issued by the NGO.
What is 12A Registration?
12A Registration is the most initial step NGO’s need to follow to seek a Certificate of Exemption from Income Tax Department.
Companies registered under Section 12A doesn’t need to pay income tax as they are exempted from it.
Furthermore, 12A Certificate helps you to seek permission from the government and the organizations abroad as 12A Registration acts as a legitimate proof of your NGO’s existence.
Significance of 12A and 80G Registration
12A and 80G Registration are recommendable for all NGOs, whether it is a Trust, Society or a Section 8 Company.
NGO with 12A Registration can claim a complete exemption from Income Tax Department. However, those with 80G Certification get the advantage of attracting more donors to the organization for donating funds.
Being an NGO, you don’t obtain such Registrations; then you will be subject to regular tax rates. Furthermore, attracting donors for donations become arduous.