The Online 12A Registration Process is an important step for NGOs and charitable companies in India looking for tax exemption under Section 12A of the Income Tax Act, 1961.
The Income Tax Department has delivered extensive updates and changes on the Online 12A Registration Process. This article shall deal with the same for your brief reference and understanding.
What is a 12A Registration?
12A Registration is a process through which NGOs, trusts, and charitable organisations get tax exemption on their income. Once registered, they don’t have to pay income tax, allowing more funds to be used for social and charitable activities.
Important Updates inside the Online 12A Registration Process
1. Use of Form 10A and 10AB
- Form 10A is used for fresh registration under Section 12A.
- Form 10AB is relevant for re-registration or renewal.
These forms are to be submitted digitally using the agency’s PAN-based login.
2. 5-Year Validity
Since April 1, 2021, all new and validated 12A registrations are legitimate for 5 years. Organizations ought to practice for renewal at least 6 months earlier than the expiry to hold their tax-exempt status.
3. E-Verification and Digital Signature
Applications have to be authenticated the use of Aadhaar-based OTP or a Digital Signature Certificate (DSC), improving safety and felony validity
4. Stricter Scrutiny
The Income Tax Department has increased scrutiny of financial records and activities to make sure that only genuine charitable businesses receive tax exemptions.
5. Time-bound Approval Process
The department now generally tactics 12A packages within 3 months, with proper documentation and compliance.
Best Practices to Avoid Errors in the Online 12A Registration Process
- Upload Proper Documents: PAN, Trust Deed, financials, clear and complete, in the correct format.
- Fill in Accurate Details: Ensure names, address, and PAN are accurate in Form 10A.
- Register on NITI Aayog: Complete DARPAN registration first.
- Apply on Time: Renew before the deadline and don’t delay. Track the status online.
- Keep Financials Ready: Updated audit reports and data are a must.
- State Clear Objectives: Mark your charitable goals in the Trust Deed/MOA.
- Verify Digitally: Use a valid DSC or Aadhaar OTP, and do not skip this step.
Conclusion
The latest updates to the Online 12A Registration Process mark a significant shift towards digitization and ease of compliance. By following a fully online and standardized procedure, the Income Tax Department ensures that only eligible and genuine charitable organizations access tax benefits.
