Can a donor claim 80G deduction on a cash donation of Rs 5,000?

No. The Finance Act reduced the cash donation limit for 80G deduction to Rs 2,000. Any donation paid in cash exceeding Rs 2,000 in a single transaction is not eligible for any deduction under Section 80G. Donors must pay via cheque, NEFT, RTGS, UPI, or other electronic payment. The 80G donation receipt must display the NGO's 16-digit Unique Registration Number (URN) issued in Form 10AC for the deduction to be valid.

What is the 85% spending rule for 12A registered trusts?

To maintain 12A income tax exemption, a registered NGO must apply at least 85 percent of its total income for charitable or religious purposes during the financial year. The remaining 15 percent can be accumulated for future use. If 85 percent is not spent, the shortfall is taxable at the maximum marginal rate. Corpus fund donations received with specific direction to form part of corpus are fully exempt regardless of this 85 percent rule.

Can 12A and 80G registration be applied simultaneously?

Yes. Form 10A on the Income Tax e-filing portal allows simultaneous application for both Section 12A and Section 80G registration in a single filing. This is the most efficient approach. Upon approval, a 16-digit Unique Registration Number (URN) is issued in Form 10AC for both registrations. The URN must be displayed on all 80G donation receipts issued to donors.

🏛️ Section 12A · Section 80G · Income Tax Act 1961 · NGO · Trust · Society · Section 8

Section 12A & 80G
Registration —
NGO Tax Exemption 2025

Q: What is the difference between Section 12A and Section 80G registration?

Section 12A (now 12AB) provides income tax exemption to the NGO itself — without it, the NGO pays income tax on all surplus at standard rates. With 12A, income is exempt provided at least 85 percent is applied for charitable purposes. Section 80G provides tax deduction benefits to donors — donors can claim 50 percent of their donation as a deduction from taxable income. 80G requires prior 12A registration. Both are applied simultaneously via Form 10A on the Income Tax e-filing portal.

Q: How long is 12A registration valid and when should I renew?

Under Finance Act 2025 (effective FY 2025-26), small trusts with income up to Rs 5 crore in the preceding two financial years get 10-year validity for 12A registration. All other trusts continue to get 5-year validity. New trusts applying for the first time receive provisional registration valid for 3 years. Renewal application must be filed in Form 10AB at least 6 months before expiry. Section 80G still requires renewal every 5 years.

Section 12A gives your NGO, Trust, or Society 100% income tax exemption on surplus income. Section 80G lets your donors claim 50% tax deduction on every donation — making your fundraising dramatically more effective. Both are filed on the Income Tax portal via Form 10A. Finance Act 2025: small trusts (income ≤₹5 Cr) now get 10-year validity. TAXAJ files both registrations end-to-end.

100% Tax

Income Exempt (12A)

50% Deduction

Donor Benefit (80G)

5 or 10 Yrs

Validity

Form 10A

Both Applications

📅 Free 12A & 80G Consultation 💬 WhatsApp 🏛️ NGO Registration →

✦ 12A & 80G — Key Facts

💰

Section 12A Benefit

NGO's income/surplus exempt from income tax — 85% of income must be spent on charitable activities

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Section 80G Benefit

Donors get 50% or 100% tax deduction on donations — massive fundraising incentive

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Application Form

Fresh registration: Form 10A · Renewal: Form 10AB · Filed on IT e-filing portal

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16-Digit URN

Unique Registration Number issued in Form 10AC/10AD upon approval

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Finance Act 2025

Small trusts (income ≤₹5 Cr): 10-year validity from FY 2025-26 (others: 5 years)

💵

Cash Donation Limit

80G deduction not available if donation >₹2,000 is paid in cash (must use cheque/online)

🏛️ CA + CS Team⚡ IT Portal Filing Expert📋 12A + 80G Same Application🔄 Renewal + Revalidation⭐ 4.9★ Google Rating🇮🇳 Delhi · Bangalore · Goa · Bihar

🎉

Finance Act 2025 Update — Small Trusts Now Get 10-Year Validity for 12A Registration

Finance Act 2025 (w.e.f. FY 2025-26): Small trusts and institutions whose total income in the preceding two financial years does not exceed ₹5 crore will now receive a 10-year validity for 12A registration (instead of the earlier 5 years). Larger trusts still get 5-year validity. This significantly reduces the administrative burden for small NGOs. Important: Trusts and institutions must still apply for registration renewal under Section 80G every 5 years. New trusts get provisional registration for 3 years. The amendment regarding registration renewal applies to applications made after March 31, 2025. TAXAJ is fully updated to file both fresh and renewal applications under the new framework.

What Are 12A & 80G?

Section 12A & 80G Registration — Complete Guide for NGOs, Trusts & Societies 2025

Sections 12A and 80G of the Income Tax Act, 1961 are the two foundational registrations that every Non-Governmental Organisation (NGO), charitable trust, society, or Section 8 Company operating in India must obtain to access income tax exemptions and make their donor ecosystem more effective. Together, these two registrations form the complete tax-efficiency package for any non-profit operating for charitable, educational, religious, or welfare purposes.

Section 12A (and its successor Section 12AB) — introduced by the Finance Act 2020 — certifies that the Income Tax authorities recognise the registered institution or trust as having been incorporated or established for a charitable purpose. The effect of such recognition is that the organisation's income — whether from donations, grants, interest, rent, or any other source — is exempt from income tax, subject to the condition that at least 85% of such income is applied for charitable or religious purposes during the financial year. The remaining 15% can be accumulated and carried forward.

Section 12A vs Section 12AA vs Section 12AB: Section 12A originally applied to trusts registered before 1996. Section 12AA was introduced for trusts registered after 1996. Finance Act 2020 replaced both with Section 12AB — which now applies to all trusts and institutions regardless of when they were incorporated. All existing 12A and 12AA registrations were required to be revalidated under 12AB. New registrations are under 12AB only. TAXAJ handles both fresh 12AB registrations and renewals of existing registrations.

What Is Section 80G Registration?

Section 80G provides tax benefits to the donors of an NGO or charitable organisation — not to the NGO itself. When an NGO obtains 80G registration, its donors can claim a deduction of 50% or 100% of the amount donated from their taxable income, subject to the applicable income ceiling. This is a powerful fundraising tool — when a corporate donor or individual knows their donation comes with a 50% tax deduction, they are significantly more motivated to donate larger amounts. 80G-registered NGOs are also preferred by corporates for their CSR (Corporate Social Responsibility) spending, as it provides donors with documented tax benefits.

Why Are Both 12A and 80G Critical Together?

12A alone: Your NGO doesn't pay income tax on its surplus — but donors get no deduction. Useful for operational efficiency but limited fundraising advantage.
80G alone: Not possible — 80G registration requires prior 12A/12AB registration. You must have 12A first.
Both together: Your NGO pays no income tax AND donors get 50% tax deduction — maximum benefit for both organisation and donor. Government funding, CSR grants, and international aid all become more accessible.
Only NGOs with both 12A and 80G registrations are eligible for government funding and grants from most institutional donors.

12A vs 80G — Deep Dive

Section 12A and 80G — What Each Registration Does and Who Benefits

Click each tab to explore the specific purpose, benefits, conditions, and process for each registration separately.

Section 12A / 12AB — Income Tax Exemption for NGOs and Charitable Institutions

NGO pays zero income tax on surplus · 85% spending rule · Provisional registration for new trusts (3 years) · Full registration: 5 or 10 years

What 12A Does for Your NGO

Exempts the NGO's entire income from income tax under Sections 11 and 12
Income from donations, grants, interest, rent — all exempt if 12A registered
15% of income can be accumulated for future use without immediate application
Corpus donations (with specific direction to corpus fund) are fully exempt regardless of spending rule
Enables the NGO to apply for government grants and institutional funding
Simplifies annual ITR filing — ITR-7 with 12A exemption status

Conditions for 12A Exemption

At least 85% of income must be applied for charitable/religious purposes during the year
Income must not be used for benefit of any private individual or related party
If 85% is not spent: the shortfall is taxable at maximum marginal rate
NGO working for benefit of a specific caste or community is disqualified
NGO must not carry on any trade or commercial activity as its primary purpose
Must file ITR-7 annually — even with zero taxable income

Provisional vs Full 12A Registration

NEW TRUST — Provisional Registration

›For newly formed trusts applying for the first time
›Valid for 3 years from date of registration
›Must apply for regular/full registration before expiry
›PCIT/CIT grants within 1 month of application

EXISTING/RENEWED — Full Registration

›Valid 5 years (large trusts) or 10 years (small trusts, income ≤₹5 Cr per Finance Act 2025)
›Apply in Form 10AB for renewal at least 6 months before expiry
›16-digit Unique Registration Number (URN) issued in Form 10AD

Section 80G — Tax Deduction for Donors to NGOs & Charitable Institutions

Donors get 50% tax deduction · Cash limit ₹2,000 per donation · 16-digit URN on donation receipt · Requires 12A first

What 80G Does for Your Donors

Donors can deduct 50% of the donated amount from their taxable income
Example: Donor gives ₹1 lakh → claims ₹50,000 deduction → saves ~₹15,600 in tax (at 30% bracket)
Applicable for individuals, HUFs, firms, and companies making donations
Deduction subject to 10% of adjusted gross total income (for certain categories)
No income ceiling for donations to government funds under 80G (100% deduction)
Donor must obtain a stamped receipt showing NGO name, date, amount, and PAN

80G Registration Conditions (NGO Must Meet)

NGO must first have valid 12A / 12AB registration
NGO should not have any non-exempt income (e.g., business income). If yes, must maintain separate books
NGO's bylaws must not allow spending on purposes other than charitable
NGO cannot work for benefit of a particular religious community or caste
Must maintain regular accounts of receipts and expenditures
Must have NITI Aayog Darpan registration (for most grant and CSR purposes)

⚠️ Cash Donation Limit: As per Income Tax rules, donations made in cash exceeding ₹2,000 do not qualify for 80G deduction. The donor must pay via cheque, demand draft, net banking, or any electronic payment method. This limit was reduced from ₹10,000 to ₹2,000. All 80G donation receipts must display the NGO's 16-digit Unique Registration Number (URN) — issued in Form 10AC upon registration approval.

Benefits

Why 12A and 80G Registration Is Essential for Every NGO in 2025

12A and 80G are not optional — they are the foundation of every compliant, fundable, and tax-efficient NGO. Here are the 8 key benefits.

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100% Income Tax Exemption on NGO Surplus

Without 12A registration, your NGO pays income tax at standard rates on all surplus income — just like a business. With 12A, all income is exempt from tax subject to the 85% spending rule. This preserves maximum resources for your charitable mission.

Section 12AB · 85% spend rule

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Attract More Donors — 50% Tax Deduction Incentive

Donors to 80G-registered NGOs get a 50% tax deduction on every donation. A donor in the 30% tax bracket giving ₹1 lakh effectively pays only ₹85,000 after tax savings. This incentive dramatically increases donation amounts and donor retention.

Section 80G · Donor deduction

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Access to CSR Funds — Section 135 Companies Act

Companies with net worth ≥₹500 crore or turnover ≥₹1,000 crore must spend 2% of net profit on CSR. Most companies prefer to donate to NGOs with valid 80G registration — providing documented tax benefits to both the company and individual directors. CSR-1 registration is additionally required to receive CSR funds from companies.

CSR funding · Section 135

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Government Grants & Institutional Funding

All Central and State Government grants, NITI Aayog funding, and most institutional donor grants are available exclusively to NGOs with both 12A and 80G registrations. Without both, your organisation is ineligible for the largest funding pools in India — including the PM CARES Fund and National Disaster Relief Fund projects.

Govt grants · Both required

🌐

FCRA Prerequisite — Foreign Donations

FCRA registration (required to receive foreign donations) effectively requires an established NGO track record — and 12A/80G registration is a key indicator of that track record. Well-established 12A and 80G-registered NGOs are significantly more likely to receive FCRA approval from the Ministry of Home Affairs. FCRA registration →

FCRA support · Foreign donors

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Enhanced Credibility & Donor Confidence

12A and 80G certificates are visible proof that the Income Tax department has scrutinised and validated your NGO's charitable objectives and activities as genuine. This credibility boost makes corporate donors, foundations, and high-net-worth individual donors far more confident in donating — knowing a government authority has vetted the organisation.

Government validation

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Finance Act 2025 — 10-Year Validity for Small Trusts

As of Finance Act 2025 (effective FY 2025-26), small trusts and institutions whose total income in the preceding two financial years does not exceed ₹5 crore will receive 10-year validity for 12A registration, reducing the administrative burden of frequent renewals significantly. TAXAJ advises on whether your trust qualifies for the extended validity.

10 years if ≤₹5 Cr income

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Carry Forward & Set Off of Losses

NGOs registered under 12A can carry forward accumulated surplus for future charitable spending without paying tax on it. The 15% that need not be applied in the current year becomes part of the corpus or can be accumulated for larger capital projects — hospitals, schools, or community infrastructure — over multiple years.

15% accumulate · Corpus fund

💼

Simplifies Audit & Annual Compliance

12A registration simplifies the annual ITR filing (ITR-7) — tax computation is straightforward once you demonstrate the 85% spending rule compliance. 80G registration requires keeping donor records with PAN details but eliminates the need for complex tax planning around donations received. Both registrations together signal compliance maturity to auditors and institutional donors.

ITR-7 · Simplified filing

80G Donor Deduction Guide

How Much Tax Deduction Can Donors Claim? — 80G Categories Explained

Not all 80G donations carry the same deduction. The deduction depends on which category the NGO/fund falls under and whether an income ceiling applies.

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100% Deduction — No Income Ceiling

Donations to the Prime Minister's National Relief Fund, National Defence Fund, National Foundation for Communal Harmony, PM CARES Fund, State Govt. Relief Funds — these qualify for 100% deduction without any income ceiling. Every rupee donated is deductible from taxable income.

100% · No ceiling · Govt funds

💯

100% Deduction — Subject to Income Ceiling

Donations to approved scientific research institutions, approved educational institutions, and approved organisations for rural development — 100% deduction but limited to 10% of the donor's adjusted gross total income. Amounts exceeding the ceiling are not deductible.

100% · 10% AGI ceiling

50%

50% Deduction — No Income Ceiling

Donations to Jawaharlal Nehru Memorial Fund, Indira Gandhi Memorial Trust, Rajiv Gandhi Foundation — 50% deduction without any income ceiling.

50% · No ceiling

50%

50% Deduction — Subject to Income Ceiling

Most registered NGOs with 80G certificate fall in this category — donors get 50% of the donated amount as deduction, subject to the 10% of adjusted gross total income ceiling. This is the category TAXAJ's clients' NGOs fall into for their 80G registration.

50% · 10% AGI ceiling · Most NGOs

⚠️

Cash Donation >₹2,000 = No Deduction

Since the Finance Act amendment, donations paid in cash exceeding ₹2,000 in a single transaction are not eligible for any 80G deduction. Donors must pay via NEFT, RTGS, UPI, cheque, or demand draft to claim the deduction. This rule applies regardless of the category of donation.

No deduction for cash >₹2,000

🧾

Required on 80G Donation Receipt

Every 80G donation receipt must contain: NGO name, NGO PAN, 16-digit URN (Unique Registration Number from Form 10AC), donor name, donor PAN, date of donation, amount, and mode of payment. Receipts without URN are invalid for claiming 80G deduction since Finance Act 2020.

16-digit URN mandatory on receipt

Registration Process

How to Apply for 12A and 80G Registration — Step-by-Step Process (2025)

Both 12A and 80G can be applied for simultaneously in a single Form 10A filing on the Income Tax e-filing portal. TAXAJ manages the complete process.

Ensure Base Registration — Trust, Society, or Section 8 Company

Before applying for 12A and 80G, your NGO must be validly registered under an applicable statute: Trust (under Indian Trusts Act 1882 or State Trust Acts), Society (under Societies Registration Act 1860 or State Societies Acts), or Section 8 Company (under Companies Act 2013). Additionally, the organisation's governing document (Trust Deed / Memorandum of Association) must explicitly state that it operates exclusively for charitable, educational, religious, or social welfare purposes and that no income or assets will be used for private benefit of any individual trustee or member. TAXAJ audits your governing document before filing to prevent rejection.

📋 Trust Deed / MoA must explicitly state charitable purposes — TAXAJ audits this

Trust Deed / MoARegistration CertificateNGO PAN Card

Register on Income Tax e-Filing Portal & Obtain NGO PAN

The organisation must have a PAN card in the name of the NGO / Trust / Society (not the individual trustee's PAN). Register the NGO on the Income Tax e-filing portal (incometax.gov.in) using the NGO's PAN, registered mobile number, and email. This creates the NGO's IT portal account from which both Form 10A (12A application) and Form 10A (80G application) will be filed. If the NGO already has an IT portal account, verify that all details match the PAN card and registration documents. TAXAJ handles the IT portal registration and account setup for new NGOs.

📋 PAN must be in the NGO's name — not an individual trustee's PAN

NGO PAN CardIT Portal AccountRegistered Email + Mobile

Compile Documents — 12A Requires More, 80G Builds on 12A

Compile all required documents for both registrations. For a new trust applying for the first time, the documentation includes: Registration Certificate, Trust Deed / MoA / AoA, PAN card, audited financial statements for the last 3 years (or since inception if less than 3 years), activity report with photographs, list of trustees/directors with PAN and Aadhaar, bank statements, address proof with NOC from landlord if rented, list of welfare activities, and declaration regarding compliance with Section 13(3) (no benefit to related parties). TAXAJ provides a complete document checklist tailored to your NGO type and ensures all documents meet the Income Tax Commissioner's format requirements before uploading.

⚠️ Audited financials for last 3 years (or since inception) + activity photos — most common rejection reason

Trust Deed / MoA3-Year Audited AccountsActivity Report + PhotosTrustee PAN + Aadhaar

File Form 10A on Income Tax Portal (Both 12A and 80G)

Log in to the IT portal → go to e-File → Income Tax Forms → File Income Tax Forms → Form 10A. Form 10A is the unified application form for both Section 12A and Section 80G registration — you can apply for both simultaneously in a single filing. Select "Registration under Section 12A and 80G" → fill in: organisation type, registration details, NGO Darpan ID (if applicable), activity description, financial details, trustee/director information, and address details. Upload all required documents. Verify and submit using Digital Signature Certificate (DSC) or Aadhaar OTP. A Form 10A acknowledgement number is generated — track it on the portal.

📋 Apply for both 12A and 80G simultaneously in Form 10A — saves time

Form 10A (IT Portal)DSC or Aadhaar OTPAcknowledgement Number

CIT/PCIT Review — Enquiry, Clarification, and Possible Hearing

After submission, the application is reviewed by the Principal Commissioner of Income Tax (PCIT) or Commissioner of Income Tax (CIT) — Exemptions having jurisdiction over the NGO's registered address. The CIT may: (1) Issue a notice asking for clarification or additional documents — respond within the timeline given (usually 30 days), (2) Ask for a personal/virtual hearing to verify the genuineness of activities and objectives, (3) Inspect the NGO's premises or ask for further activity evidence. The CIT focuses on: whether charitable objectives are genuine, whether past activities match the stated objectives, and compliance with applicable laws (Societies Act, Companies Act, etc.). TAXAJ represents clients before the CIT and responds to notices on their behalf.

📋 CIT may ask for clarification or hearing — respond within deadline · TAXAJ manages responses

CIT Notice ResponseActivity VerificationPremises Inspection (if asked)

Receive 12A and 80G Certificates — 16-Digit URN in Form 10AC/10AD

Upon satisfactory review, the PCIT/CIT issues the approval: Section 12A registration in Form 10AC and Section 80G registration also in Form 10AC (for new registrations) — both with a unique 16-digit alphanumeric Unique Registration Number (URN). For provisional registration (new trusts), the PCIT must pass the order within 1 month of receiving the application. Download and preserve both certificates from the IT portal. The 16-digit URN must be displayed on all 80G donation receipts issued to donors — receipts without URN are invalid for claiming tax deductions. TAXAJ delivers certified copies of both certificates.

⚡ 16-digit URN mandatory on every 80G donation receipt — print this on all donor receipts

Form 10AC (12A + 80G certificates)16-Digit URNDisplay URN on receipts

Documents Required

12A and 80G Registration Documents — Complete Checklist by Entity Type

Documents vary by whether the NGO is a Trust, Society, or Section 8 Company, and whether it is a new applicant or seeking renewal. Select your situation.

✓

Trust Deed — certified copy, all pages, self-attested by head trustee

✓

Trust Registration Certificate from Registrar / Sub-Registrar

✓

PAN Card of the Trust

✓

Audited Financial Statements — Balance Sheet, I&E Statement, Receipts & Payments for last 3 years (or since inception)

✓

Bank statements of the Trust — last 3 years with narration

✓

Annual Report / Activity Report with photographs of activities conducted

✓

List of all Trustees — Name, Address, PAN, Aadhaar, Designation, Mobile

✓

Address proof of registered office — Electricity bill / Rent Agreement

✓

NOC from property owner if rented / leased premises

✓

Transaction-wise donation details — Date, Name, Address, PAN, Amount of each donor

✓

Declaration — Irrevocable Clause in Trust Deed (charity-only use)

✓

NGO Darpan ID (NITI Aayog registration) — required for Form 10A

✅ New trusts that have been operational less than 3 years qualify for provisional registration — TAXAJ advises on whether you qualify for provisional (3 years) or regular registration based on your history.

✓

Memorandum of Association (MoA) — certified copy, all pages, with charitable objects

✓

Articles of Association (AoA) — for Section 8 Companies

✓

Registration Certificate — under Societies Registration Act 1860 or Companies Act 2013

✓

Certificate of Incorporation from MCA — for Section 8 Companies

✓

PAN Card of the Society / Section 8 Company

✓

Audited Financial Statements for last 3 years or since inception

✓

Bank Statements with narration — last 3 years

✓

List of Governing Body / Board Members / Directors with PAN + Aadhaar

✓

Activity Report with photos and beneficiary data

✓

Address proof of registered office + NOC if rented

✓

All Expenses Invoices, media coverage, affiliation certificates, licenses

✓

NGO Darpan / CSR-1 registration (if applicable)

💡 Section 8 Companies must also ensure the MoA includes a clear charitable objects clause with no provision for dividend distribution to members — the "no profit distribution" clause must be explicitly stated. TAXAJ verifies this before filing.

✓

Existing 12A/80G Certificate + URN (to be renewed)

✓

Updated financial statements for last 3–5 years since previous registration

✓

Updated activity reports with photos and beneficiary data for all years

✓

Updated list of trustees/directors/members with current PAN + Aadhaar

✓

ITR-7 filed for all applicable years

✓

Bank statements for the entire period since previous registration

✓

Any change in Trust Deed / MoA / AoA since last registration

✓

FCRA Annual Returns (if FCRA registered)

✓

CSR-1 registration number (if receiving CSR funds)

✓

Donor list with names, PAN, amounts for the entire period

✓

Declaration of compliance with Sec 13(3) and Sec 2(15)

✓

Address proof update if registered office has changed

⚠️ Renewal Deadline: Apply for renewal in Form 10AB at least 6 months before expiry of the existing 12A/80G registration. Late renewal = break in tax exemption. TAXAJ tracks your registration expiry and files renewal well in advance.

FAQ

Section 12A and 80G Registration — Frequently Asked Questions

Section 12A (now 12AB) provides income tax exemption to the NGO itself. Without it, the NGO pays income tax on all its surplus income at standard rates. With 12A registration, the NGO's income is exempt from tax provided at least 85% is applied for charitable purposes. Section 80G provides tax deduction benefits to the donors of the NGO — donors can claim 50% of their donation as a deduction from their taxable income. 80G does NOT give any direct tax benefit to the NGO. The two work together: 12A makes your NGO tax-efficient, 80G makes your NGO attractive to donors. 80G registration requires prior 12A registration — you cannot get 80G without 12A.

Under Finance Act 2025 amendments (effective FY 2025-26), the validity depends on your trust's size: Small trusts with income ≤₹5 crore in the preceding two financial years get 10-year validity. All other trusts continue to get 5-year validity. New trusts applying for the first time receive a provisional registration valid for 3 years — they must convert to regular registration before expiry. Renewal application must be filed in Form 10AB at least 6 months before expiry. Note: Section 80G still requires renewal every 5 years regardless of the 10-year 12A extension. TAXAJ tracks both registration expiry dates and files renewals proactively to ensure no gap in tax exemption.

Yes — and TAXAJ recommends applying for both simultaneously. Form 10A on the Income Tax e-filing portal allows you to apply for both Section 12A and Section 80G registration in a single application form. This saves time and ensures the CIT reviews both together. However, it's important to note that the approval timelines may differ — 12A is often approved faster than 80G, as 80G requires additional scrutiny of the NGO's activities. Both approvals issue the 16-digit URN in Form 10AC. TAXAJ files the combined application to maximise efficiency.

12A registration is not legally mandatory — but practically, every NGO and charitable trust should obtain it. Without 12A: (1) The NGO pays income tax on all surplus income at the maximum marginal rate, significantly reducing funds available for charitable work; (2) The NGO is ineligible for most government grants and institutional funding; (3) Donors cannot claim 80G deductions (as 80G requires 12A). There is no legal penalty for not having 12A, but an NGO without 12A will have a significantly higher tax burden and much lower fundraising potential. TAXAJ recommends applying for 12A within 1-2 months of incorporating the NGO.

No. The Finance Act amendment reduced the cash donation limit for 80G deduction from ₹10,000 to ₹2,000. Any donation paid in cash exceeding ₹2,000 in a single transaction is not eligible for any deduction under Section 80G, regardless of the donor's income level or the NGO's 80G registration status. The donor must pay via cheque, demand draft, NEFT, RTGS, UPI, or other electronic payment methods. Additionally, the 80G donation receipt issued by the NGO must display the organisation's 16-digit Unique Registration Number (URN) — issued in Form 10AC — for the deduction to be valid. Receipts without the URN cannot be used by the donor to claim deductions.

To maintain the 12A income tax exemption, a registered trust or NGO must apply at least 85% of its total income during the financial year for charitable or religious purposes. The remaining 15% can be accumulated for future use or added to the corpus fund. If the 85% spending threshold is not met in a given year: the shortfall (i.e., the portion of income not applied for charitable purposes, beyond the 15% allowance) is taxable at the maximum marginal rate. If the trust cannot apply the full 85% due to unavoidable circumstances, it can file a declaration with the IT authorities to accumulate the income for up to 5 years for a specific charitable purpose. Corpus fund donations (received with specific direction to form part of corpus) are completely exempt regardless of the 85% rule.

TAXAJ Services

Section 12A and 80G Registration — Service Packages

TAXAJ's CA + legal team handles the complete IT portal filing — document review, Form 10A preparation, CIT query responses, and certificate delivery.

12A & 80G — Fresh Registration

^₹7,999

New NGO / Trust / Society / Section 8

✓Trust Deed / MoA audit for 12A objects
✓Form 10A preparation + IT portal filing
✓Document review + upload support
✓CIT query response + hearing support
✓12A + 80G certificate delivery

Get Started →

Complete NGO Registration & Compliance Services at TAXAJ

⚖️

Run Your NGO Tax-Free.
Get 12A & 80G Registered with TAXAJ.

Trust Deed / MoA audit · Form 10A filing · CIT representation · 16-digit URN certificate. CA + CS team. Fresh registration from ₹7,999. Renewal from ₹5,999.

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