12A and 80G Registration for Trusts & NGOs: Tax Exemption & CSR Grant Eligibility Guide

Charitable trusts, educational societies, healthcare institutions, and Section 8 non-profit companies operating across Raipur, Jagdalpur, Kalahandi, and Koraput play a vital role in social development.

To claim exemption on charitable receipts and attract corporate CSR funding or individual donations, obtaining Section 12A and Section 80G registrations under the Income Tax Act is an absolute prerequisite.

Important Compliance Alert: The Central Board of Direct Taxes (CBDT) introduced a unified re-registration regime. All existing and new trusts must navigate Form 10A (Provisional) and Form 10AB (Regular) registration timelines to preserve their tax-exempt status.

1. Statutory Summary: Section 12A vs. Section 80G

2. Income Application Rule & Section 11 Compliance

Under Section 11 of the Income Tax Act, charitable income is exempt only if:

1. 85% Application Rule: At least 85% of gross receipts (including voluntary contributions) are applied toward charitable or religious purposes in India during the financial year.
2. Accumulation under Section 11(2) (Form 10): If a trust cannot apply 85% of its income due to ongoing capital projects (e.g., building a hospital or school in Kalahandi), it can accumulate the shortfall for up to 5 years by filing Form 10 electronically before the due date under Section 139(1).
3. Accumulation under Section 11(1): A statutory deemed application of up to 15% of gross receipts can be carried forward indefinitely.

3. The Re-Registration Lifecycle: Form 10A vs. Form 10AB

[New NGO Created] ➔ [File Form 10A (Provisional 3 Yrs)] ➔ [Commence Activities] ➔ [File Form 10AB (Regular 5 Yrs)]

Phase 1: Provisional Registration (Form 10A)

• Issued to newly established trusts before commencing charitable activities.
• Granted electronically without extensive field verification, valid for 3 years.

Phase 2: Regular 5-Year Registration (Form 10AB)

• Must be filed at least 6 months prior to expiry of provisional registration OR within 6 months of starting charitable activities, whichever is earlier.
• Involves detailed scrutiny by the Principal Commissioner of Income Tax (CIT) verifying actual charitable expenditure, bank records, and trust deed clauses.

4. Mandatory Annual Donor Reporting: Form 10BD & Form 10BE

To prevent fake donation claims, the CBDT mandated electronic filing of Form 10BD:

• Form 10BD (Annual Statement of Donations): Every 80G registered trust must submit Form 10BD electronically on or before 31st May following the end of the financial year, listing the name, PAN/Aadhaar, address, donation amount, and mode of payment for every donor.
• Form 10BE (Certificate of Donation): Downloaded from the portal after filing Form 10BD and issued to donors as proof to claim their 80G income tax deduction.

Late Fee Warning: Delay in filing Form 10BD attracts a late fee of Rs. 200 per day under Section 234G, plus potential penalties ranging from Rs. 10,000 to Rs. 1,000,000 under Section 271K.

5. Trust Audit Rules: Form 10B vs. Form 10BB

If total income of the trust (without giving effect to Section 11 and 12 exemptions) exceeds the basic exemption limit (Rs. 2,50,000), the accounts must be audited by a Chartered Accountant.

The CBDT has revised audit report forms based on foreign contributions and total income:

NGO & Trust Compliance Support

Our non-profit advisory practice at Rabi Agrawal & Associates provides end-to-end support for 12A and 80G registrations (Form 10A/10AB), annual Form 10BD donor reporting, Form 10B/10BB trust audits, and CSR grant documentation for trusts and societies in Chhattisgarh and Odisha.

Consult our partner team at Raipur Head Office or Jayapatna Branch for trust compliance.