Hope all of you enjoying our updates. Today I would like to share details regarding How to apply 80G, 12A, 35AC & FCRA registration. We are not going to explain the laws. But we have given a basic knowledge tips as non-profits and Ngo are searching the word “how to apply for.
Several social welfare non-profit organizations are not aware of getting the certification from income tax department or from the foreign affairs department for their fundraising, due to the lack of knowledge or as they do not know the exact way to get it. When they are in neck of the movement or when they are in an issue related to such certificate, they are driving the search engines to know it.
People are always searching with the word HOW TO APPLY 80G, 12A, 35AC & FCRA registration. Before applying any tax exemption related certifications you must have a PAN Card (Permanent Account Number with Income Tax department – Apply for PAN) . Without PAN you cannot apply for 12A.
Applying for 12A certificate
To ensure the acceptance of the organization by Income Tax department we need to apply for 12a certification. After getting the 12a certification the organization gets the perfect legal entity. After received the 12a certification, organization shall, apply for 80G.
Apply for 80G certificate
By showing their record of achievements in social welfare activities and by proving their service to the public. By getting this 80 G certification, organization are privileged to provide tax exemption to the Donors who donates their organization. That is when an organization receives donation from public, individual or from a group it shall issue 80G tax exemption to the donor, where donors are entitled to donate from their 10% of Gross total annual income. In that 10% of their donation, donors shall receive 10% tax exemption for their donation. So this type of certification, gives the power to the organization to encourage their donation to donate more.
Applying for 35AC
35AC tax exemption eligibility is provided by the income tax department to the organization to raise the funds for specific projects such as medical research, and so many other social welfare activities. By this 35ac certificate, the organizations are privileged to provide 100% tax exemption to the amount received as donation from the donors. So when the donor donates a fund for the project, they shall receive full tax exemption. 35ac sector has several other sub division certifications like 35ac 1 & 2, 35ac 1 & 3, which has same and additional privilege to provide tax exemption to the donors. (See the details about 35ac) In fact the entire nonprofit ngo organization are not being qualified or certified for 35ac. In a broad vision it is provided for specific projects and being monitored by Income tax department for proper accountability and service of such projects which have to be completed within some specific periods.
So the above information are about tax exemption certificates which give the power to the nonprofit organizations, to provide tax exemption benefits to the donors and contribution providers. In another vision, if an organization is receiving funds or donation from another organization for a same project or with same object, it may come into an account of inter charity donation. So there, these types of tax exemptions shall not be valid.
Note: All tax exemption procedures, certifications and information related to above certificates are only for outline knowledge and as a visitor you have to consult with professional auditors, lawyers, and other qualified persons who deal with income tax accounting for nonprofit organizations.
Applying for FCRA – (Foreign Contribution Regulation Act)
In all countries, all governments have their own rules and regulation towards foreign contribution to their native country. It may be in currency form or it may be in material form. However, it’s our duty and our responsibility to inform our government before our foreign deals. In this vision every nonprofit organization has the responsibility to inform about their contribution in any form, which they are going to receive from outside their native country. Our Indian government has specified several procedures and rules to received foreign funds or materials from outside sources of India. And the Home ministry and External affairs ministry plays and empowered to monitor and to administrate such foreign deals. So here the Foreign Contribution Regulation Act of India applies.
An authorization certificate is being issued by the home ministry of India which is called FCRA to the nonprofit ngo organization before their play with any type of foreign contribution. So apply for FCRA, nonprofit ngo organization have to apply by opening a separate bank account where they should not transact any of their local funds. A separate book keeping, accounting procedures should be followed as per the Foreign contribution regulation Act.
It will be better, if the nonprofit ngo organization is applying specifically for a cause or project, to get the prior permission. NGO sector people use to say, that there are some special routes to receive foreign currency, even without prior permission and it shall be informed to the Government within 30 days on receipt of such foreign contribution, which is not a healthy approach and it may lead the nonprofit organization to several enquiries which may result as punishable offence. So our suggestion is, without the knowledge and prior permission of Indian Government any citizen, or non-profit ngo organization, should not receive or deal with any foreign currency or any type of foreign contribution.