12A Registration in Bihar is a one-time enlistment which is conceded by the Income Tax Department to trusts and other not really for benefit associations. The reason for the enlistment is to be excluded from the installment of personal duty. 12A Registration is by and large applied for following fuse.
12A registration in Bihar, India is a legal process that allows non-profit organizations (NPOs) to avail of tax exemptions for their charitable activities. This registration is issued by the Income Tax Department of India to NPOs that meet certain criteria and fulfill the legal provisions for 12A registration.
Meaning and Definition:
12A registration refers to the registration of a non-profit organization under Section 12A of the Income Tax Act, 1961. This registration allows the organization to be exempted from paying income tax on its income and donations received.
The provisions related to 12A registration in Bihar are governed by the Income Tax Act, 1961, and the Income Tax Rules, 1962. The provisions state that an NPO must apply for 12A registration within one year of its establishment to be eligible for tax exemptions.
The process for 12A registration in Bihar is as follows:
- Obtain a PAN card for the organization
- Prepare the necessary documents, such as memorandum of association, articles of association, and trust deed
- Apply for 12A registration by filing Form 10A with the Income Tax Department
- Attach the necessary documents, such as the PAN card, audited financial statements, and the organization’s registration certificate
- Submit the application online or in person at the Income Tax Department office
Advantages: The main advantages of obtaining 12A registration in Bihar are:
- Tax exemption for the NPO’s income and donations received
- Increased credibility and transparency of the organization
- Eligibility to receive foreign contributions under the Foreign Contribution Regulation Act (FCRA)
- Ability to issue tax-exempt donation receipts to donors
The disadvantages of obtaining 12A registration in Bihar are:
- The NPO must comply with certain regulations and guidelines set by the Income Tax Department
- The registration process can be time-consuming and costly
- The NPO may be required to maintain certain records and file regular tax returns
The cost involved in obtaining 12A registration in Bihar includes the following:
- Professional fees for preparing the necessary documents and filing the application
- Government fees for filing the application and obtaining the registration certificate
- Other expenses, such as notarization and stamp duty
The time involved in obtaining 12A registration in Bihar can vary depending on various factors such as the completeness of the application and the workload of the Income Tax Department. Typically, it takes around 2-3 months for the Income Tax Department to process the application and issue the registration certificate.
The documents required for 12A registration in Bihar are as follows:
- Memorandum of association and articles of association
- Trust deed (if applicable)
- PAN card of the organization
- Registration certificate of the organization
- Audited financial statements for the past three years
- Address proof of the registered office of the organization
- Board resolution authorizing the application for 12A registration
Note: The above information is based on the knowledge cutoff of 2021-09 and may be subject to change in the future. It is advisable to consult a legal or financial professional for the latest information and guidance.
Pay of an association is excluded in the event that NGO has 12A Registration. All pay will not be available after 12A Registration. This is one time enrollment.
Trusts and NGOs having 12A Registration appreciate exclusion from paying annual expense on the excess pay of the Trust or NGO. Personal duty exception is accessible for all non-benefit NGOs.
Section 12 A of the Income Tax Act, 1961, is an onetime expense exclusion gave to trusts, NGOs and Section 8 Companies. Associations holding an enrollment under segment 12A are excluded from paying duties on their excess pay.
NGOs are associations engaged with altruistic and non-benefit exercises. Nonetheless, they really do acquire pay and they are expected to pay charge according to typical rates in the event that not enlisted under segment 12A, Income Tax Act.
15% of income/donation is aimlessly excluded whether the above pay applied for beneficent reason;
Deliberate commitments/gift made with a particular course that they will frame part of the corpus of the trust is entirely excluded;
Benefactor of NGO will get allowance regarding the gift made to such NGO; also, there is numerous mores.
To profit such advantages, the NGO/magnanimous trust needs to enlist themselves with annual assessment under area 12A , Section 12AA and Section 80G of personal duty act, 1961
New Registration (As revised by Finance Act, 2020)
An application for new enrollment under area 12A will be given to Principal Commissioner or Commissioner, according to arrangements of segment 12AB. A temporary enrollment for quite a long time will be given to associations. The enrollment once allowed will be legitimate for a considerable length of time from the Assessment Year from which the enlistment is looked for. Application for recharging of such new enrollment should be submitted
– somewhere around a half year before the expiry of legitimacy period or
– in something like a half year from beginning if exercises,
whichever is prior.
The temporary enrollment so conceded will be substantial for a time of 3 years and consequently should be reestablished toward the finish of the previously mentioned courses of events. The enlistment so reestablished will be legitimate just for 5 years and should be restored toward the finish of every 5 years.
Significant Note: In instances of new enrollment, application will be submitted, no less than one month preceding the beginning of the earlier year pertinent to the evaluation year for which enlistment is looked for, meaning accordingly new NGO won’t be qualified for have the advantage of enlistment of area 12AB in the main year of activity.
Migration of existing enrollments (As corrected by Finance Act, 2020)
All enlisted NGOs are expected to apply for re-approval in Form No. 10A, in somewhere around 90 days from first April 2021. Enrollment so re-approved will be substantial just for 5 years. The application for the reestablishment of registration (following five years) should be submitted something like a half year preceding the expiry of legitimacy period. The restoration application will be submitted in the Form No. 10AB.
Documents required for 12A registration:
The accompanying reports should be presented by the 12A enrollment candidate in Form 10A:
- Affirmed duplicate of the instrument under which the trust/foundation was made/laid out, if appropriate
- Affirmed duplicate of the archive proving the production of the trust or the foundation of the establishment, if pertinent
- Ensured duplicate of enlistment with RoC/Registrar of Firms and Societies/Registrar of Public Trusts, whichever material
- Confirmed duplicate of the records proving reception or change of the items, if any Certified duplicate of the yearly reports of the trust/foundation for a most extreme three quickly going before monetary years, if relevant Note on exercises
- Affirmed duplicate of existing request conceding enrollment under area 12A or segment 12AA, if any. Affirmed duplicate of request of dismissal of utilization for award of enrollment under area 12A or segment 12AA, if any.
Procedure of 12A registration:
Note: ONLY when a NGO is enrolled, it can apply for 12A Registration.
STEP-1) Filing 10A Form
10A Form ought to be filled online outfitted with important records according to run 17A of the Income Tax Act, 1962 to Jurisdictional Principal Commissioner/Income Tax Commissioner.
Chief will actually look at the subtleties of the application and may request extra records/data, whenever required. Such questions ought to be answered appropriately in any case might prompt dismissal of utilization.
STEP-3) Issuance of 12A Certificate
You’ll be conceded a lifetime 12A Certificate for your enlisted NGO once the Income Tax Commissioner is persuaded with its motivation and legitimacy.
Presently, your foundation is lawfully endorsed NGO with the lifetime arrangement of assessment exception under Section 12A.
More About 12A registration:
Eligibility criteria: To be eligible for 12A registration in Bihar, the non-profit organization must be a trust, society, or a company limited by guarantee. Additionally, the organization must not have any income or property applied for personal gains, and it must exist solely for charitable or religious purposes.
- Renewal of registration: 12A registration is valid for perpetuity, but the Income Tax Department may conduct periodic reviews to ensure that the organization continues to meet the eligibility criteria. The organization must also file regular tax returns and maintain proper books of accounts to retain its registration.
- Tax exemption benefits: Once an organization obtains 12A registration, it becomes eligible for tax exemption on its income and donations received. This means that the organization does not have to pay income tax on its income, and donors can claim tax deductions on their donations to the organization.
- FCRA registration: 12A registration is a pre-requisite for obtaining registration under the Foreign Contribution Regulation Act (FCRA). This registration allows the organization to receive foreign contributions for its charitable activities.
- Importance of proper documentation: The registration process for 12A registration requires the submission of various documents, such as the memorandum of association, articles of association, and audited financial statements. It is crucial for the organization to ensure that these documents are properly prepared and filed, as any discrepancies or errors can lead to the rejection of the application.
- Professional assistance: Due to the complexity of the registration process and the importance of proper documentation, it is advisable for organizations to seek the assistance of a professional, such as a chartered accountant or a lawyer, who has experience in handling 12A registration applications.
Overall, 12A registration is an essential requirement for non-profit organizations in Bihar that wish to avail of tax exemption benefits and increase their credibility and transparency. By fulfilling the eligibility criteria and following the proper procedures for registration, organizations can ensure that they comply with the legal provisions and achieve their charitable objectives effectively.