A Chennai trust, society, or Section 8 company can be legally formed and still owe income tax and struggle to attract donations if it hasn't completed 12A and 80G registration. These two approvals are what actually unlock the tax benefits people associate with non-profits.
12A: exemption for the organisation's own income
Without 12A registration, an NGO's income — including donations received — is taxable like any other entity's income. 12A registration under the Income Tax Act exempts income applied toward the organisation's charitable or religious purposes from tax.
80G: deduction for the donor
80G registration doesn't change the NGO's own tax position — it allows individuals and businesses donating to the NGO to claim a deduction on their own taxable income. In practice, this is a major fundraising lever: donors, especially corporate CSR contributors, are far more likely to give when they can claim a deduction.
Step-by-step process
- Complete formation of the entity (Trust deed registration, Society registration, or Section 8 Company incorporation).
- Apply for provisional 12A registration via Form 10A on the income tax e-filing portal — this is typically fast for newly formed entities.
- Apply for provisional 80G registration (also Form 10A), usually alongside 12A.
- Operate for the provisional period (commonly 3 years) while maintaining proper books, activity records, and donation receipts.
- Apply for regular registration via Form 10AB before the provisional period expires, supported by evidence of actual charitable activity.
- Renew regular registration before each validity period (typically 5 years) lapses.
Common mistakes that delay approval
- Trust deed or governing document objects clauses that are too vague or don't clearly state charitable purpose
- Missing or inconsistent financial records from the period before applying
- Applying for regular registration without sufficient evidence of actual activity during the provisional period
- Letting the registration lapse by missing the renewal window — this is treated as a fresh application, not a simple renewal
FCRA — a separate consideration
If your NGO expects to receive donations from foreign sources, note that FCRA (Foreign Contribution Regulation Act) registration is a completely separate approval process from 12A/80G, with its own eligibility conditions and compliance obligations.
Our Trust & NGO registration service handles formation, 12A/80G applications, and renewal tracking so your organisation doesn't inadvertently lapse into taxable status.