Section 12A of Income Tax Act, 1961: Procedure and Required Documents

It’s a general phenomenon that every business organization and individual has to pay income tax to the government. If a certain amount increases their income, they are required to pay extra tax to the government. However, the government has also provided numerous exemptions for trust/charitable institutions, which reduces the tax liability. The present article will be focusing on section 12A of the Income Tax Act, 1961 (Act), which gives the option to trust/religious/charitable/welfare institutions or Non-Government Organizations (NGOs) to get registered themselves and claim exemption from Income Tax (IT).

For the same, section 12A of the Act has enumerated certain conditions that the applicant must fulfill to get this IT exemption. In this article, with a brief of said provision (u/s 12A) writer will summarize the whole procedure and entailing all the documents required for this claim. With this, the writer will finish this article with its closing statement.

Registration u/s 12A: Eligibility Criteria

Section 12A of the Act; property income or income earned from voluntary contributions with the sole objective of work for charitable and religious purposes from IT liability. The main criteria of said benefit are to use the abovesaid income for public welfare without earning profit from the same. The term ‘charitable purpose’ is specifically defined u/s 2(15) of the Act says that any public utility work for the interest of the poor, education, yoga, medical relief, environment/wildlife preservation, and artistic/historic. 

If any entity is doing the same, it can register itself u/s 12 A of the Act by filing a Form [A or AB] provided on the official website. While proceeding following documents is required:

1. Registration certificate or establishment proof of the entity i.e. company/trust/firm/ society/NGO etc.;
2. Last 3 years annual books of accounts;
3. Complete details of non-commercial activity undertaking zero profit. Further, proof of adoption/modification of object (if any);
4. Supporting documents (if applicable).

Note: The applicant must self-certify all documents; otherwise the department can reject the application or ask for re-submission.

Registration u/s 12A: Step by Step Procedure

Since last year, the IT department has made this registration procedure operative through online mode. After arranging all the documents mentioned above, the applicant can submit its application with the following easy steps:
1. Login on the official e-filing portal of the IT website;
2. Check IT Forms on-file tab & select relevant form;
3. Fill requisites of the form and submit;
4. Attach required documents with the application;
5. Submit with the digital signature.
If no discrepancy appears, then 16 digits alphanumeric Unique Registration Number (URN) will be issued to the applicant, which can be used for claiming exemption from IT.

Advantages of Section 12A

Besides IT exemption said provision has the following benefits:
1. The registered entity can accumulate or set aside its income up to 15% of the total amount earned for doing charitable work;
2. Eligible for getting government funding or domestic/international grants easily.

Advancement in relation to Section 12A 

Though the present article is on section 12A of the Act only, many amendments happened that directly/indirectly interrelate the present subject matter. Like, new provisions i.e. section 12AA [procedure of registration] & 12AB [procedure of fresh registration] of the Act was added. Along with this, two separate forms are provided, namely form A for the old registered entity and form AB for the entity registered from 01.04.2021.
Previously there was no requirement of renewal; however, from last year i.e., 2020; new applications filed with Form AB u/s 12AB; department shall issue a provisional certificate with only 3 years validity. After the first renewal, registration shall be valid for 5 years, and it has to be regularly renewed after 5 years of duration. The renewal application is required to be filled 6 months before the expiry of registration.


Considering the above discussion, it can be predicted that the IT department is on the toes for reframing this exemption mechanism which surely increases accountability of the charitable entities. Thus, deriving benefits from section 12A of the Act will not be so easy.

Our company has a team of professionals that can help you with services related to company registration, intellectual property registration, and many more. To know more visit Quick Company.

Related Articles