This 12A Certificate is usually for Non-Profit Organizations (NGO’s and Trust). If they have this Certificate, then they no need to pay the tax to the Government. All the income of that NGO’s or Trust will not be taxable, or you can say exempt. In other words, you can say 12A Certificate is an Exemption Certificate.
If the NGO and Trust are not registered, then Income Tax is payable on the surplus during the year and this is called one-time registration.
To register under section 12A the eligible organization must file form 10A. If the Applicant has a Digital Signature Certificate (DSC), then the form can be filed online. You can file form 10A electronically through Electronic Verification Code (EVC) if you are not required your Digital Signature to file Income Tax Return (ITR) online. The application for Section 12A registration is officially filed with the Jurisdictional Commissioner of Income Tax.
Benefits of 12A Certificate
There are mainly some benefits of this 12A Certificate like;
- The fund that is used for charitable or religious purposes is the Income application and it is nothing, but the expenses used for the same when calculating the Income of the Trust.
- The income received will be free from Taxation.
- For religious and charitable purposes, any person who registered under this section 8 can avail benefits for accumulating or setting aside income which is not more than 15%.
- Income will be exempted.
- Benefits will be granted by the Government.
- Useful in FCRA Registration.
Eligibility Criteria for Registration of 12A Certificate
There are some eligibility criteria for the registration of this 12A Certificate. This certificate does not apply to the Family or Private Trust. But, Charitable Trust, Religious Trust, Societies and Companies which comes under section 8 are eligible for this certificate. The Exemption Certificate of that non-profit NGO and Trust can be applied immediately after the registration of that NGO or Trust.