Are you one, planning to consider section 12A? But don’t know how? This is very basic knowledge- The 12A enrollment is an essential document for those who must pay income tax.
This form helps the government keep track of income tax payments and ensures that the correct quantum of duty is being produced. The government introduced specific rules in the Finance Act, 2020, making it obligatory for charitable/ religious/ educational institutions trusts to re-register provisional enrollment under the sections mentioned before.
Section 12A of the Income Tax Act, of 1961 is a milestone for a charitable trust. If any non-profit organization, charitable trust, or welfare society wants to claim full tax exemption then as per this section you can enable this option.
Form 12A represents Section 12A, which helps the government keep track of income tax payments. It helps to ensure the correct amount of tax is being produced or not. The registration for Form 12A is valid for 1 year so it must be restarted yearly. There are several details you need to know before applying for section 12A.
There are mainly 2 types of trusts that can apply for form 12A.
A private trust is created by guardians for their children or other descendants. A private trust is for instance considered to take care of something specific like a child’s higher education. It is something like specific or general trust. This kind of trust can be created between any 2 entities.
This trust is started by a settler that creates an asset in the form of property or cash. With this kind of donation to the corpus, some purposeful work can be done. Most charitable trusts fall in this category.
To be eligible for section 12A, assesses must first apply to compliance with all necessary formats and procedures. After submitting all these applications online, the applicant may receive requests from the tax authorities. If some additional documents are needed, then submit them as well.
Here is the step-by-step process for form 12A registration:
As with all kinds of enrollments some important documents are needed. Here are some mentioned below. You must have the following documents ready before you begin the process of applying for an instrument under section 12A.
You can directly download the Form 12A template from UBS HR Toolkit.
There are major benefits to registering for section 12A. Here are some mentioned below.
One of the main benefits to fill the form 12A and submit it is the trust gets an exemption from income tax. All the income of the trust can be counted for the income tax exemption.
As per the income tax rules, TDS must be deducted for every individual payment. But if NGO is registered for 12A, it will help to exempt it from Tax deducted at source.
Once your trust is registered under section 12A, it becomes a recognized entity.
The trusts have started doing CSR- corporate social responsibility, and are ready to give funds to those trusts working for social causes, that is registered under section 12A.
Once this registration is done, your trust or NGO can easily open a bank account under the same name.
Your NGO or trust wants to avail foreign funds, after this registration, it will become very easy.
As mentioned ahead, Form 12A is the most important for the NGO or any private trust owner. You can get the privileged benefits by registering yourself under section 12A. Sometimes, people do the fewest mistakes in filling out the forms, and addressing the formalities can lead to rejection of the form. But no worries, UBS can guide you in every way. You can directly download Form 12A word or PDF from the HR toolkit & and you can get the ultimate guide from UBS. Check our blogs to get a guide to fill all the government forms.