CA Pooja Madhan

 

The various benefits of section 12AA Registration are enumerated as below:

 

  1. The income applied for charitable or religious purpose will be considered as application of income i.e. expenditure incurred for charitable and religious purpose will be allowed while computing income of the trust.

 

  1. The benefit of accumulating or setting aside of income not exceeding 15% for charitable or religious purpose will be available.

 

  1. The accumulation of income, which is deemed as application of income as per section 11(2), shall not be included in the total income.

 

  1. NGO’s receives various grants from government and other agencies. They are eligible to get grants and financial funding from various agencies. These agencies generally make grants to 12AA registered NGO’s.

 

 

  1. Benefit in section 80G registration. NGO’s have to apply separately for section 80G registration.

Note:

It is important here to note that when registration u/s 12AA is granted , it does not mean that section 80G approval is also given i.e. registration under section 12AA will not provide automatic approval under section 80G. Section 80G only applies to charitable trusts or institution. It does not apply to religious trusts or institutions. Hence, the application for grant of license u/s 80G is to be given separately.

 

  1. Finance Act, 2014 has extended the benefits of registration for prior years as well. These benefits have been extended to the trusts or institutions where the registration has been granted under section 12AA.

 

  1. Registration under section 12AA is one-time registration. Once the NGO registered U/s 12AA it need to get its renewal, the benefits of the section will be available for lifetime of the trust or institution unless its canceled.

 

  1. NGO can attract donations from the potential Donors, as the Donor can claim exemption U/s 80G Income tax Act for the donation made to 80G registered NGO. NGO can avail Grants or Funds from Govt./Abroad/other Agencies.

 

  1. The income received will be exempt from taxation to the extent its been applied for charitable purpose in India.