12A and 80G Registration Explained for Delhi NGOs and Trusts

Two registrations, two different beneficiaries

The most common misunderstanding we encounter from newly formed trusts and societies in Delhi is that 12A and 80G are two names for the same thing, or that obtaining one automatically gives the other. They are separate applications, granted separately, and they benefit different people.

Registration under section 12A — now granted under section 12AB — exempts the organisation's own income from income tax, provided the organisation applies its income to its charitable objects in the manner the Act requires. Without it, a trust's receipts are potentially taxable like any other entity's, which for a donation-funded organisation is a serious problem.

Approval under section 80G benefits your donors. It allows a person or company donating to you to claim a deduction for the donation in their own return. It does nothing at all for the organisation's tax position directly; what it does is make you fundable.

In practice you need both. Without 12AB the organisation itself is exposed; without 80G most serious donors will not give, because institutional and corporate donors treat the 80G number as a basic eligibility filter.

Provisional versus regular registration

The registration framework distinguishes between organisations that have started work and those that have not.

A newly formed organisation that has not yet commenced activities applies for provisional registration. Because there are no activities to examine, the application is relatively straightforward and is generally processed on the basis of the constitutional documents. Provisional registration is granted for a limited period.

Before that period expires — or within a specified time of commencing activities, whichever applies — the organisation must apply again for regular registration. This second application is materially different in character. The department now examines the genuineness of your activities and whether they conform to the objects in your deed. It can and does raise written queries, and it can refuse.

Organisations that treat provisional registration as the finish line get an unpleasant surprise at renewal, particularly if they have not been keeping records of what they actually did. Photograph your work, keep beneficiary records, retain receipts and minutes, and publish an annual report. That evidence is what regular registration turns on.

The application in outline

1. Constitute the entity properly. The deed or memorandum must have charitable objects within the meaning of the Act, an irrevocability provision, and a dissolution clause directing surplus assets to another similar organisation rather than to members.
2. Obtain PAN and open a bank account in the organisation's own name. Both are prerequisites.
3. File the application — Form 10A for a first-time or provisional application, Form 10AB for conversion to regular registration or for renewal — on the income tax portal, with the deed, activity evidence, financial statements and details of trustees or governing body members.
4. Answer queries. The department may ask for further evidence of activity, clarification of objects, or trustee details. Replies are time-bound; missing the window is a common cause of avoidable rejection.
5. Receive the certificate in Form 10AC, carrying your registration number and its validity period. This is the number donors will ask for.
6. Diarise the renewal. Neither registration is permanent. Both run on a fixed-period cycle and must be renewed by fresh application before expiry.

Why applications get rejected

• Object clauses that are not charitable. A deed that permits the organisation to carry on general business, or to benefit a specific family or a narrow private group, will not satisfy the charitable purpose test.
• No irrevocability or a defective dissolution clause. If assets can revert to the settlor or be distributed among members on winding up, the organisation is not genuinely charitable in the required sense.
• No evidence of activity at the regular registration stage. An organisation that has done nothing for the period covered cannot demonstrate genuineness.
• Accounts that do not exist or do not reconcile. Donations received should be traceable through the bank account and recorded in properly maintained books — which is why we handle bookkeeping and audit for NGOs alongside registration.
• Queries left unanswered. Replies to departmental notices are time-bound. Applications fail on timing far more often than on merits.
• Applying too early. Filing for regular registration before there is anything to show is a predictable rejection. Sometimes the right advice is to wait a few months and build the record first.

What compliance looks like after registration

Registration is the beginning of an obligation, not the end of a process. A registered organisation must:

• Maintain proper books of account and supporting records for all receipts and applications of income
• Get accounts audited where required and file the audit report in Form 10B or 10BB, as applicable
• File its income tax return in ITR-7 each year, within the due date — late filing can jeopardise the exemption itself
• File the statement of donations received in Form 10BD and issue donation certificates to donors in Form 10BE
• Apply at least the prescribed proportion of its income towards its charitable objects during the year, or comply with the accumulation provisions where it cannot
• Keep the registration current by renewing before expiry

The Form 10BD requirement deserves particular attention, because it changed the relationship between NGO and donor. A donor's 80G deduction is now cross-checked against the donation reported by the organisation. If you do not file Form 10BD accurately and on time, your donors' deductions are at risk — which is the fastest way to lose them.

Foreign donations are a separate question

Neither 12AB nor 80G permits an organisation to receive foreign contributions. That requires separate registration or prior permission under the Foreign Contribution (Regulation) Act, which carries its own eligibility conditions, a designated bank account requirement, restrictions on transferring funds to other organisations, and its own annual reporting. Organisations planning to raise money from overseas donors, diaspora groups or foreign foundations should factor this in from the outset rather than treating it as a later formality.

Practical advice for a new Delhi NGO

1. Get the deed right first. Almost every problem later traces back to the constitutional document. It is far cheaper to draft it properly than to file a supplementary deed after a rejection — see drafting of deeds in Delhi.
2. Open the bank account early and route every rupee through it. Cash-heavy operations are difficult to evidence and invite scrutiny.
3. Document activities from day one. Photographs, beneficiary lists, project notes, minutes and an annual report. Build the file as you go rather than assembling it under deadline pressure.
4. Keep donation records donor-wise with PAN, since Form 10BD requires exactly that.
5. Diarise the renewal the day the certificate arrives.

This article is general guidance current as at the date of publication and is not advice on your specific facts. Registration periods, forms and procedures under sections 12AB and 80G have changed several times in recent years. Please take advice on your own position before acting.