Apply Online for 12A Registration

12A Registration, granted by the Income Tax Department, is a one-time registration for trusts and other nonprofit organizations. The primary objective of this Registration is to obtain an exemption from income tax payment. Generally, organizations apply for 12A Registration soon after their incorporation. Nonprofit entities such as Section 8 Companies, Trusts, and NGOs that have obtained 12A Registration are entitled to income tax exemption on their surplus income.

At IndiaFilings, we understand the importance of obtaining Section 12A registration for your organization. We offer comprehensive assistance and guidance throughout the registration process to help you unlock the benefits and privileges provided under Section 12A of the Income Tax Act.

Contact IndiaFilings today to embark on your journey toward Section 12A registration. Let us handle the complexities while you focus on making a positive impact in society.

12A Registration – Overview

After establishing a Trust organization or NGO, it is necessary to register under Section 12A of the Income Tax Act to claim exemptions provided by Sections 11 and 12. Section 12A allows nonprofit entities such as Charitable Trusts, Nonprofit Organizations, Welfare Societies, Religious Institutions, etc., to enjoy total tax exemption per the Income Tax Act of 1961 provisions.

If a non-profitable trust or NGO fails to register for 12A, their financial receipts and transactions will be taxable. It's important to note that private or family trusts are not eligible for such exemptions and cannot obtain 12A Registration.

Benefits of 12A Registration

The advantages associated with obtaining Section 12A Registration are as follows:

  • Income Application: The funds utilized for charitable or religious purposes are considered the application of income. This means that expenses incurred for such purposes are considered when calculating the nonprofit organization's taxable income.
  • Income Tax Exemption: Income received by the organization will be exempt from the charge of Income Tax. This exemption allows the organization to allocate more resources toward its philanthropic endeavors.
  • Accumulation of Income: Registered entities can accumulate or set aside income for future use. However, the amount set aside should not exceed 15% of the funds for charitable or non-commercial purposes.
  • Exclusion from Total Income: The income that is accumulated and considered as the income application is not included in the assessee's total income. This helps in reducing the tax liability of the organization.
  • Access to Grants: NGOs with Section 12A registration are eligible to receive grants from both domestic and international sources. Various agencies and institutions specifically provide grants to NGOs that have obtained Registration under this section.
  • One-Time Registration: The Registration granted under Section 12A is treated as a one-time registration. Once registered, the organization remains active until the date of cancellation, eliminating the need for periodic renewal.
  • Flexible Benefits: Registered NGOs can avail themselves of the registration benefits as and when required, without any rigid renewal process. This flexibility allows organizations to use the benefits based on their needs and circumstances.

By obtaining Section 12A Registration, nonprofit organizations can unlock these valuable benefits, enabling them to effectively pursue their charitable and religious objectives while enjoying tax exemptions and financial support from various sources.

Eligible Entity for Section 12A registration

Section 12A registration is available to various types of entities that meet the eligibility criteria. The following entities are eligible for Section 12A registration:

  • Trusts: Public charitable trusts, religious trusts, and other types of trusts established for charitable or religious purposes can apply for Registration under Section 12A.
  • Institutions: Charitable or religious institutions, including educational institutions, hospitals, medical institutions, and other similar establishments, are eligible for Section 12A registration.
  • NGOs (Non-Governmental Organizations): Nonprofit organizations engaged in social welfare, community development, environmental conservation, or other charitable purposes can apply for Registration under Section 12A.
  • Societies: Societies registered under the Societies Registration Act of 1860 and engaged in activities of a charitable or religious nature can seek Registration under Section 12A.
  • Section 8 Companies: Companies registered under Section 8 of the Companies Act 2013, established for promoting art, science, commerce, sports, education, research, social welfare, or any other charitable objectives, are eligible for Section 12A registration.

Eligibility Criteria under Section 12A

To qualify for Section 12A registration, certain criteria set by the Income Tax Department must be fulfilled.

  • To qualify for 12A Registration, the organization must meet the "charitable purpose" definition per the Income Tax Act.
  • Charitable purposes include relief to the poor, education, medical relief, and activities focused on environmental preservation.
  • Objectives related to public utility also qualify as charitable purposes.
  • Registration is granted if there is no profit motive behind the organization's activities.
  • If the organization engages in trade or commerce, Registration is granted only if trade receipts are less than twenty percent of total receipts.
  • Private or Family Trusts are not eligible for 12A Registration.
  • The organization's activities must genuinely benefit the public to qualify for Registration.

Filing of Form 10A

Form 10A is an essential form that must be filed by entities intending to register under Section 12A. The application process for Section 12A registration and the filing of Form 10A has been streamlined to be exclusively conducted online. A digital signature is required for authentication to proceed with the online filing. When applying for Registration under Section 12A, it is mandatory to affix the digital signature of the founder or author of the trust.

The application for Registration, using Form 10A, should be submitted online and addressed to the Commissioner of Income Tax. Alongside the application, the necessary documents should be included to complete the registration process successfully. This digital and online procedure ensures a streamlined and efficient process for entities seeking Section 12A registration, promoting ease and convenience in complying with the requirements.

Validity of Section 12A Registration

Once an organization obtains Section 12A registration, the validity of the Registration is perpetual unless it is canceled or revoked by the Income Tax Department. Unlike certain registrations requiring periodic renewal, Section 12A registration has no expiration date or a specific time limit.

The registered entity must fulfill its obligations and adhere to the prescribed rules and regulations to maintain the validity of Section 12A registration.

Documents Required for Registration under Section 12A of the Income Tax Act

Several documents are required to be submitted to the Income Tax Department to apply for 12A Registration. These documents include the following:

  • A self-certified copy of the instrument used to create the trust or establish the institution. If the trust or institution was created through means other than drafting and registering an instrument, a self-certified copy of the document proving its creation must be submitted.
  • A self-certified copy of the Registration made with the applicable body, which could be the Registrar of Companies, the Registrar of Firms and Societies, or the Registrar of Public Trusts.
  • A self-certified copy of the documents provides evidence for adopting or modifying the entity's objectives.
  • Annual financial statements for the preceding three financial years.
  • A detailed note describing the activities conducted by the entity.
  • In cases where the Income Tax department has canceled the Registration granted under this section due to a default, the assessee must submit a self-certified copy of the existing order granting Registration after rectifying the default.
  • Suppose the assessee had previously applied for Registration under this section, and the application was rejected. In that case, a self-certified copy of the rejection order should be attached to the current application.

12A Registration Procedure

The procedure for obtaining 12A Registration involves the following steps:

Submission of Application

As mentioned above, the assessee must apply in the prescribed format online. The application should contain all the necessary details and supporting documents.

Request for Additional Information

After the application is submitted, the Commissioner may request the applicant to provide additional information or documents. This request ensures the genuineness of the activities undertaken by the trust or institution.

Approval and Written Order

If the Commissioner is satisfied with the application and supporting documents, a written order is passed stating that the assessee is eligible to obtain Registration under Section 12A. The written order is then forwarded to the assessee.

The privilege of Registration

Upon receiving the written order, the assessee can avail of the Registration privilege under Section 12A. This Registration grants the entity the benefits and exemptions associated with Section 12A.

Rejection of Application

If the Commissioner is unsatisfied with the application or finds any deficiencies, they have the right to reject it. In such cases, the assessee will be informed about the reasons for the rejection.

By following this procedure and meeting the requirements, entities can obtain 12A Registration, enabling them to enjoy the advantages and privileges provided under Section 12A of the Income Tax Act.

Assistance with 12A Registration: How IndiaFilings Can Help

IndiaFilings offers valuable assistance for Section 12A registration, ensuring a smooth and hassle-free process. With team of experienced professionals, we provide expert guidance every step of the way. From understanding the requirements to preparing the necessary documentation, IndiaFilings ensures that all the essential aspects of the registration process are handled efficiently. We have extensive knowledge of the procedures, enabling them to easily navigate the complexities. By entrusting the Section 12A registration process to IndiaFilings, individuals, and organizations can save time and effort while ensuring compliance with the necessary legal formalities. IndiaFilings is your trusted and reliable partner when it comes to seeking assistance with Section 12A registration. With our expertise and unwavering commitment to customer satisfaction, we provide comprehensive support throughout the registration process.

12A Registration FAQ's

What is Section 12A registration, and why is it important?

Section 12A registration is a one-time registration granted by the Income Tax Department to nonprofit organizations, providing them with an exemption from income tax. It is important as it enables organizations to enjoy tax benefits and carry out their charitable activities effectively.

Who is eligible for Section 12A registration?

Trusts, NGOs, charitable institutions, religious institutions, and Section 8 companies engaged in charitable or religious activities are eligible for Section 12A registration. However, private or family trusts are not eligible.

How can I apply for Section 12A registration?

You can apply for Section 12A registration by submitting an online application in Form 10A to the Commissioner of Income Tax and the necessary documents. Contact IndiaFilings for a seamless and hassle-free experience in obtaining Section 12A registration.

Can IndiaFilings assist in the entire Section 12A registration process?

Yes, IndiaFilings can provide end-to-end assistance in the Section 12A registration process. Our experts guide you through the application, documentation, and filing procedures.

Can a trust apply for Section 12A registration after its incorporation?

Yes, trusts can apply for Section 12A registration immediately after their incorporation. It is advisable to apply at the earliest to avail the benefits of registration.

What documents are required for Section 12A registration?

The required documents include a self-certified copy of the trust deed or instrument, registration certificates, financial statements for the past three years, and a note on the activities conducted by the organization.

What is the validity period of Section 12A registration?

Section 12A registration is generally valid indefinitely unless it is canceled or revoked by the Income Tax Department

Is it mandatory to renew Section 12A registration periodically?

No, Section 12A registration does not require periodic renewal. Once registered, it remains valid until canceled or revoked by the Income Tax Department.

Can a private trust apply for Section 12A registration?

No, Section 12A registration is not applicable to private or family trusts. It is meant for public charitable trusts and other eligible entities.

Can a trust with business activities apply for Section 12A registration?

Trusts primarily engaged in business activities are not eligible for full exemption under Section 12A. However, they may be eligible for partial exemptions.

Can a trust apply for Section 12A registration after its incorporation?

Yes, trusts can apply for Section 12A registration immediately after their incorporation. It is recommended to apply at the earliest to enjoy the benefits.

Is it necessary to renew Section 12A registration?

No, Section 12A registration does not require periodic renewal. Once registered, it is valid until canceled or revoked by the Income Tax Department.

Can a trust receive foreign contributions after obtaining Section 12A registration?

Yes, trusts with Section 12A registration can receive foreign contributions by obtaining additional registration under the Foreign Contribution (Regulation) Act (FCRA).

What are the tax benefits of Section 12A registration?

Entities with Section 12A registration enjoy tax exemptions on their surplus income, and the income used for charitable or religious purposes is considered tax-exempt.

Can a trust carry forward its accumulated income after obtaining Section 12A registration?

Yes, a registered trust can accumulate its income for future use or investment following the provisions of the Income Tax Act.

Is it mandatory for a trust to maintain audited financial statements?

Yes, trusts are required to maintain audited financial statements and file income tax returns in compliance with the Income Tax Act.

How long does it take to obtain Section 12A registration?

The timeline for obtaining Section 12A registration can vary depending on the complexity of the case and the responsiveness of the Income Tax Department. It typically takes a few months.

Can a trust apply for Section 12A registration if it has already been rejected?

Yes, a trust can make a subsequent application for Section 12A registration even if its previous application was rejected. It is essential to address the reasons for rejection in the

Can IndiaFilings help in rectifying the previous rejection of Section 12A registration?

Yes, IndiaFilings can assist in making subsequent applications and addressing the reasons for rejection, helping organizations rectify the issues and increase their chances of successful registration.

Related Business Registrations

In addition to registration or incorporation, a business may require other registrations depending on the business activity undertaken. Talk to an Advisor to find out registrations your business may require post registration.

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