80G & 12A Registration Guide

What are 12A and 80G?

Sections 12A and 80G of the Income Tax Act are the two registrations that form the backbone of tax exemption for non-profit organisations in India. Though often mentioned together, they serve entirely different purposes and benefit different parties.

Section 12A — now administered as Section 12AB following the Finance Act 2020 amendments — grants tax exemption to charitable and religious organisations on their income. The exemption operates through Sections 11 and 12 of the Income Tax Act, which allow a registered trust, society, or Section 8 company to retain its surplus income without paying tax on it, provided that income is applied toward charitable purposes. Without 12A registration, an NGO's surplus is taxed at the standard applicable rate, just like any commercial entity.

Section 80G allows donors to claim a tax deduction on donations made to registered organisations. A donor who contributes to an 80G-approved NGO can generally deduct 50% of the donated amount from their taxable income, subject to certain limits. This makes the organisation a far more attractive recipient of philanthropic giving, since the donation effectively costs the donor less after tax.

Both registrations are filed with the Income Tax Department through the Income Tax e-Filing portal and are administered by the jurisdictional Principal Commissioner or Director General of Income Tax.

Difference between 12A and 80G — who benefits?

The simplest way to understand the distinction is to ask who receives the tax benefit:

• 12A / 12AB benefits the NGO. The organisation itself does not pay tax on its income, so more of every rupee received goes toward the charitable mission.
• 80G benefits the donor. The person or company making the donation gets a deduction on their own tax return, which incentivises larger and more frequent giving.

Most well-run NGOs obtain both registrations. 12A is the more fundamental of the two — it protects the organisation's own finances — while 80G is a powerful fundraising tool that signals credibility to potential donors. Some funders and corporate CSR teams explicitly require 80G registration before they will partner with an NGO.

Who is eligible?

To qualify for 12A and 80G registration, an entity must be one of the following legal forms:

• A charitable or religious trust created under a valid trust deed
• A society registered under the Societies Registration Act, 1860
• A Section 8 company incorporated under the Companies Act, 2013

The organisation must exist for genuine charitable purposes. The Income Tax Act recognises these as charitable purposes: relief of the poor, education, medical relief, preservation of environment (including watersheds, forests, and wildlife), and the advancement of any other object of general public utility. The entity must not be formed for the benefit of any particular religious community or caste — this is an explicit condition for 80G approval under Section 80G.

The organisation's objects, as stated in its founding document (trust deed, memorandum, or articles), must clearly reflect one or more of these purposes. Vague or commercially oriented objects will lead to rejection of the application.

The 85% application rule explained

Section 11 of the Income Tax Act imposes a core compliance condition on every 12A-registered organisation: at least 85% of the income received during a financial year must be applied toward charitable purposes in that same year. If the 85% threshold is not met, the unapplied portion of the income loses its tax exemption and becomes taxable.

This rule exists to prevent organisations from accumulating donations indefinitely while claiming tax-exempt status. The law does, however, allow income to be accumulated for specific future charitable purposes. To do this legally, the organisation must accumulate the income in accordance with the conditions set out in Section 11(2) — which includes filing the appropriate form and specifying the purpose and time horizon for which the accumulation is being made. Accumulated income that is not applied within the permitted period (typically up to five years) becomes taxable.

For practical purposes, this means every registered NGO must track its income and expenditure carefully each year and ensure that its charitable spending meets or exceeds the 85% threshold. This is one of the most common areas where organisations fall foul of the tax authorities.

Registration process — Form 10A and Form 10AB

The registration process is conducted entirely online through the Income Tax e-Filing portal. The forms you use depend on whether you are a new entity seeking registration for the first time or an existing entity seeking renewal or conversion.

Form 10A — new or provisional registration

Form 10A is the application form used by entities seeking fresh registration. It is also used by organisations that have not yet commenced their charitable activities — in this case, the department grants a provisional registration that allows the entity to operate as a tax-exempt organisation while it builds up its operations.

The application requires details of the organisation's legal structure, governing instrument (trust deed, memorandum, or articles), objects, activities, and the identities of its trustees, directors, or office bearers. Supporting documents must be uploaded, including the registration certificate from the relevant authority (Registrar of Societies, Registrar of Companies, or sub-registrar for trusts).

Form 10AB — renewal or conversion

Form 10AB is used in two situations: first, to convert a provisional registration into regular registration (typically within six months before the provisional period expires or within six months after commencing activities); and second, to renew an existing regular registration that is approaching the end of its validity period.

Upon approval of either Form 10A or Form 10AB, the Income Tax Department issues Form 10AC or Form 10AD, which is the order granting registration and contains the Unique Registration Number (URN). The URN is the proof of registration and must be quoted in all future correspondence, returns, and donation certificates.

Provisional vs regular registration

The Finance Act 2020 introduced a two-tier registration system that distinguishes between organisations that are just starting out and those that are already operational.

• Provisional registration is granted to new entities — including those that have not yet commenced activities — and is valid for 3 years. During this period, the organisation can operate as a tax-exempt entity and receive donations. The provisional registration is essentially a good-faith approval based on the organisation's stated objects and governing instrument.
• Regular registration is granted after the department has reviewed the organisation's actual activities and financials. It is valid for 5 years and is renewable. To move from provisional to regular registration, the entity must file Form 10AB at the appropriate time.

Some small trusts may receive a longer validity period of up to 10 years, depending on the department's assessment. The renewal process for regular registration must be initiated before the existing registration expires to avoid a lapse in tax-exempt status.

Validity and renewal timeline

Planning the renewal cycle is essential to maintaining uninterrupted tax-exempt status. The key milestones are:

• Year 0: File Form 10A. Receive provisional registration (Form 10AC) valid for 3 years.
• Within 6 months before provisional expiry (or within 6 months of commencing activities): File Form 10AB to convert to regular registration.
• Regular registration: Valid for 5 years (or up to 10 years for qualifying small trusts).
• Before regular registration expires: File Form 10AB again to renew for a further 5-year term.

Organisations should set internal reminders at least six months before each expiry date to ensure there is adequate time to gather documents, prepare the application, and file on the portal.

Donation reporting — Form 10BD and Form 10BE

Organisations that hold 80G registration have an annual reporting obligation tied to the donations they receive. Two forms are involved:

• Form 10BD is the statement of donations received during the financial year. It must list every donor who made an eligible contribution, along with the amount, mode of payment, and the donor's PAN (for donations above Rs 2,000 made in cash, the donation is not eligible for 80G; for non-cash donations, the PAN is required).
• Form 10BE is the certificate issued to each donor. The donor uses this certificate as proof when claiming the 80G deduction on their own tax return. The certificate is generated automatically once Form 10BD is filed.

Both forms are filed on the Income Tax e-Filing portal, and the due date is May 31 following the financial year in which the donations were received. Failing to file Form 10BD on time can result in a penalty and, more seriously, can call into question the organisation's continued 80G eligibility.

The Income Tax Act 2025 changes

The Income Tax Act 2025, which takes effect from April 1, 2026, represents a significant consolidation of the tax code. For the non-profit sector, the most important changes are:

• Consolidation into Chapter XVII-B (Sections 332-355): All provisions relating to charitable and religious trusts, which were previously scattered across multiple sections of the 1961 Act, are now consolidated into a single chapter.
• New terminology — Registered Non-Profit Organisations (RNPO): Entities that hold valid registration under the new Act are termed Registered Non-Profit Organisations. This replaces the earlier references to 12A, 12AA, and 12AB registered entities.
• Form 112 replaces Form 10B and 10BB: The audit report that registered organisations must file — previously Form 10B (for larger trusts) or Form 10BB (for smaller trusts) — is consolidated into a single Form 112 under Section 348 of the new Act.
• Re-registration required: Existing entities holding 12A, 12AA, or 12AB registration must re-register under the new Act to continue enjoying tax-exempt status. The re-registration is done via Form 10AB filed under the new framework.

Organisations should begin preparing for the transition well before April 1, 2026. This includes ensuring that all existing registrations are valid, that prior-year returns and audit reports are filed, and that the governing documents are in order. The transition window and exact procedural details are being notified by the Central Board of Direct Taxes (CBDT) through rules and circulars.

Common mistakes and edge cases

Over years of working with Indian NGOs, certain patterns of error recur. Being aware of them can save significant time and money:

• Objects clause mismatch: The objects in the trust deed or memorandum do not clearly fall within the recognised charitable purposes. This is the most common reason for initial rejection. Have a professional review the governing instrument before filing.
• Religious or caste-specific benefit: An organisation whose activities benefit only a particular religious community or caste will not qualify for 80G, even if the work is otherwise charitable. The benefit must be for the general public.
• Not applying 85% of income: Organisations that spend heavily on administration or accumulate income without following Section 11(2) procedures risk losing exemption on the unapplied portion.
• Missing the Form 10BD deadline: Filing after May 31 attracts a penalty and can jeopardise 80G status. Set a calendar reminder every April.
• Letting registration lapse: Failing to file Form 10AB for renewal before expiry creates a gap in tax-exempt status that cannot be cured retroactively.

Guardrails and important points

• Registration is granted by the jurisdictional Principal Commissioner / Director General of Income Tax, not by a local officer. The application is routed through the e-Filing portal.
• The Unique Registration Number (URN) issued via Form 10AC or 10AD is the definitive proof of registration. Keep it on record and quote it in all official filings.
• Audit requirements apply to most registered organisations. Under the new Income Tax Act 2025, Form 112 (Section 348) consolidates the earlier Form 10B and Form 10BB. The audit must be conducted by a qualified chartered accountant and filed by the due date.
• Any change in the objects, address, or governing body of the organisation must be reported to the Income Tax Department, as it may affect the registration.
• Registration can be withdrawn if the department finds that the organisation has ceased to exist for charitable purposes or has violated the conditions of registration.

Penalties for non-compliance

The consequences of failing to comply with 12A and 80G requirements are serious and can be cumulative:

• Cancellation of registration: The Principal Commissioner can cancel 12A/12AB or 80G registration if the organisation violates the conditions, fails to apply income for charitable purposes, or engages in activities outside its stated objects.
• Loss of tax exemption: Once registration is cancelled, the organisation's income becomes taxable from the date specified in the cancellation order. This can apply retrospectively in cases of fraud or misrepresentation.
• Tax on accumulated income: Income that was accumulated under Section 11(2) but not applied within the permitted period becomes taxable, along with interest.
• Penalty for late filing of Form 10BD: A fee of Rs 200 per day applies for each day of delay in filing the donation statement, subject to a maximum.