Thinking About To Submit Form 12A? – Comprehensive Guide To Know
UBS

Thinking About To Submit Form 12A? – Comprehensive Guide To Know

January 18, 2023
HR Toolkit
Form 12A

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.

What’s Section 12A? Or What Is Form 12A?

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.

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Types Of Trust Can Apply For Section 12A

There are mainly 2 types of trusts that can apply for form 12A.

  • Private Trust

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.

  • Public Trust

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.

Criteria To Be Eligible For 12A

  • For eligibility for Section 12A registration, the organization must meet the Income Tax Act- charitable purpose for the education, poor, medical relief, and activities undertaken to preserve the environment.
  • All the activities in the trust are motivated by no profit motive. Only and only registration will be granted if this is done.
  • It should be taken care of that Form 12A registration does not consider a family trust. The activity should be genuinely for the welfare of the public.
  • If the assesses’ activities are considered to be trade or commerce. The registration is only granted if the receipts from the trade activity are below 20%.

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The Procedure for Obtaining 12A Registration

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:

  • Firstly, submit Form 10A with the specified documents.
  • After that file, a Form 10A online if you can add a digital signature or you can file it in another way.
  • You need to submit additional documents or information to prove the genuineness of trust.
  • Once the commissioner is satisfied, he or she will register as per the Form 12A sample under the income tax act. If he or she is not satisfied they will reject your application.
  • Once the enrollment order has been passed, your trust will have 12A validity.
  • Trust doesn’t have to renew this enrollment ever. And this registration process takes around 3 months.

Documents Needed for 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.

  • Copy of the trust registration with public trusts, companies, societies, or firms.
  • Copy of the trust work which establishes the trust’s creation, date of establishment, and location.
  • Copy of Form 12A PDF.
  • Document of location and registered address.
  • Document of  the adoption of objects including any board resolutions.
  • Document of information about the trust activities.
  • All copies related to accounts of the trust.
  • Copy of rejection order received when you applied and get rejected for section 12A.

You can directly download the Form 12A template from UBS HR Toolkit.

Form 12A

Note: This letter will be useful to you! You can edit it, as your needs and requirements.

What Are The Benefits of 12A Registration?

There are major benefits to registering for section 12A.  Here are some mentioned below.

  • It Can Help For Exemption From Income Tax

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.

  • It Can Help For Exemption From TDS

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.

  • It Gives Recognition To Your Trust

Once your trust is registered under section 12A, it becomes a recognized entity.

  • It Gives CSR Benefits

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.

  • It Helps To Open A Bank Account Easily

Once this registration is done, your trust or NGO can easily open a bank account under the same name.

  • It Helps To Avail Foreign Funds

Your NGO or trust wants to avail foreign funds, after this registration, it will become very easy.

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Essentially,

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.

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Alpesh Vaghasiya

Alpesh Vaghasiya

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