Section 12A / 12AB — income-tax exemption for NGOs

In short

12A (now operationalised through 12AB) exempts a charitable organisation's surplus from income tax, provided income is applied to charitable purposes. It is a prerequisite for 80G and CSR-1.

Who it applies to

Trusts, societies and Section 8 companies pursuing charitable or religious purposes.

Key points

• —Exempts the organisation's own income from tax when applied to its objects.
• —Since 2021, registration is granted for 5 years and must be renewed (Forms 10A / 10AB).
• —Provisional registration is available for new entities, later converted to regular.
• —A precondition for obtaining 80G approval and filing CSR-1.

Deadlines & renewal

Renewal at least 6 months before the 5-year validity expires; new entities apply within set windows of commencing activities.

What to do

Track the validity window and file renewal in time; keep books that demonstrate application of income to objects.

Worth knowing

Lapse can expose the organisation's income to tax and invalidate dependent 80G/CSR-1 status.