Last updated: January 10th, 2024 5:31 PM

12A Registration

12A registration is a one-time registration which is granted by the Income Tax Department to trusts and other not for profit organisations. The purpose of the registration is to be exempted from the payment of income tax. 12A registration is generally applied for immediately after incorporation. Section 8 Companies, Trusts and NGOs which have obtained 12A registration enjoy exemption from paying income tax on their surplus income. The 12A registration facility is available for all non-profit entities. Hence, it is necessary for all Trusts, NGOs and other Not-for-Profit organisations to be aware of Section 12A of the Income Tax Act. The purpose of the present article is to discuss the procedure for obtaining 12A registration.

Benefits of 12A Registration

The benefits of Section 12A Registration are the following:

• The fund used for charitable or religious purposes is considered to be the application of the income. The income application refers to the expenses used for charitable or religious purposes for calculating the taxable income of the not-for-profit organisation.
• The income received will be free from the charge of Income Tax.
• The person who is registered under Section 12A can avail benefits for accumulating or setting aside income. However, the income which is set aside should not be more than