12A Registration of NGO online process

What is Sec 12A ?

Income of Organization registered as Charitable and Religious Institute under any Law of India will be exempted from Income Tax only if they get the Certificate under this section.

Sec -12A

It deals with exemption explanations.

Sec -12AA

It deals with the procedure for such exemption.

Benefits

1. Expenditure incurred for charitable or religious purpose will be allowed while computing income of the trust.
2. Accumulating or setting aside of income not exceeding 15%.
3. Generally Government Grants given to 12A registered Organisations only.
4. 12A is a pre-requisite to Apply for 80G Certificate.
5. For FCRA registration, 12A is mandatory.

Documents
Keep below documents ready before application

1. Copy of Registration Certificate.
2. Copy of Trust Deed / Society Deed/MOA.
3. Copy of PAN.
4. Copy of FCRA registration if any.
5. Copy of last 3 years Audit Reports.
6. Note on Activities.
7. List of Main Objects.
8. Copy of Documents evidencing modification of objects.
9. Copy of order of earlier rejection of 12A.

Notes :-

1. All the above copies must be self-attested by authorized person.
2. If certificate is in vernacular language, then get it translated in English and notarised it.

Procedure :-

Application need to be filled in Form No 10A by Online mode
only. Follow below steps to apply for 12A.

16 Steps for 12A Application

Step 1.Go to this website

https://www.incometaxindiaefiling.gov.in/home
Click on “Login”.

Step 2. Fill Login Details

Enter UserID = Organisation PAN.
Enter Password.
Enter Captcha .
Click “Login” .

Step 3. Go to “e-File”

Click on “Income Tax Forms”.

Step 4. Select Form Name = “Form No 10A …”

Step 5. Select Submission Mode = “Prepare and Submit Online”

Step 6. Select Jurisdiction

By default it is “CIT (Exemptions), your-city”.
If you have different jurisdiction, select accordingly.
Click “Continue”.

Step 7. Read Instructions

After that, Form 10A will be opened. Read Instructions carefully.

Step 8. Fill General Information of Form

Click on tab “Form 10A”
Fill General Information – Name, Address, Email, Mobile etc..

Step 9. Fill Trustee/Board Members Details

Step 10. Specify Objects of the Organisation

Tick appropriate objects as per your Organisation’s main objects.
Fill Point No 5,6,7 if applicable.

Step 11. Fill FCRA Detail, if applicable

Step 12. Fill Detail of Signing Authority

Name, Address, Phone, Email etc..

Step 13. Preview the Form

Download draft form in PDF and check correctness of details.

Step 14. Upload Documents

Upload scan copies of relevant documents.
Click on “Submit” button in the bottom.

Step 15. E-Verification of Form

There are three options to e-verify this form:-
1. If you have already generated EVC (E-Verification Code).
2. If you do not have EVC, click this, it will email you OTPs.
3. If you select AADHAR Option, OTP will be sent to Auhtorized person Mobile linked with AADHAR.

Step 16. Acknowledgement

After verification as above, a Transaction ID has been provided.
Note down that.
Also acknowledgement has been sent to given email address.
Take a print of it and keep it in file for future reference.

Time

Generally, within 15-30 days, a query raised by Assessing Officer asking for more documents or explanation.
If he is satisfied with all the information / documents submitted, certificate has been issued.

Consequences

Donation, Grant and any other income of Organisation is taxed as per Income Tax Slabs, if it is not registered under 12A. Thus, without 12A, Organisation is treated as commercial entity and is be taxed accordingly.

 

Contact Us

For any further query, please contact us

 

 

 

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Now DARPAN ID is optional for FCRA services

As you aware that FCRA department has made DARPAN ID compulsory for all FCRA related services since October 2017. Since then, for every service of FCRA, like filling Annual Return, Updating quarterly receipts, FC registration, renewal etc.. website prompt you to link DARPAN ID of your organisation.

However, there were lots of technical difficulties in generating DARPAN ID with darpan ngo website, although it work great in the marketing department since they use the help of the Indexer digital marketing agency for this. Those who got the DARPAN ID before 2017 could not link it with FCRA department. Also, technical queries were not answered promptly by the department.

Looking to all such difficulties, FCRA department has reconsider it and now made it OPTIONAL to quote DARPAN ID with FCRA portal. Read the full notification here. This is a welcoming step from FCRA department.

If you have already generated DARPAN ID, it is highly advisable to link it with your FCRA registration.

 

 

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Date extended for FCRA Annual Return FC4

As we know, last date for filling FCRA return in Form FC4 is 31/12 i.e. after 9 months of financial year end. Thus, for FY 2017-18, last date was 31.12.2018. However, this year, FCRA department has made it compulsory to take DARPAN ID and link it with FCRA department.

But, generating DARPAN ID without any error is a huge task and even after submission to DARPAN ID portal, it takes days and months to get DARPAN ID.

Looking to all this difficulties and representation made by many organizations, it is decided by FCRA department to extend FCRA Annual Return date from 31.12.2018 to 31.03.2019

Read full notification here :

fc_notice_29122018

 

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FCRA registration suspended for another 156 NGO

Central Government vide notice dated 21.12.2017 had directed that all the persons who are either registered or having prior permission shall open their bank account in one or more banks who are linked with PFMS. Also, to change the bank account one month was given. Most of the Banks have started linking with PFMS system and many organisaations have changed their bank account, if their bank was not ready to linked with PFMS.

However, FCRA has issued notice on 6th December, identifying 156 organisation who have not change their Bank Account and still having Bank Account with Non-PFMS Banks. After show cause notice was given on 29.06.2018, FCRA department has decided to suspend their registration for 180 days.

Check the full notice :

fc_order_12102018

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Is TDS applicable to NGO?

Yes, TDS is applicable to the NGOs. There is no general exemption that Trust, Society or Non Profit Organizations are exempt from deducting and paying TDS. It depends on the Financial Transactions and limits of TDS specified every year in the Financial Act. Thus if NGOs makes payments to specific persons above specific limits, needs to deduct and pay TDS within time line specified.

Look the info-graphic below regarding TDS.

Note : Above rates and limits are for FY 2018-19

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Rotation of Board Members in NGO

Do your organization have “Board Rotation Policy” ? Many funding agency and corporate asking this question before giving funds. It sounds irrelevant, but it is not. Every donor wants 100% utilization of single rupee, he donates to you. And every donor wants that an NGO should have highly effective governance. Today let us discuss this issue of rotation of board members or trustees in NGO from various view points, get your pregnancy pillow and get comfortable.

Is it Mandatory?

First and obvious question is about its legal implications. As, there are various acts in india under which an organization can be registered, there is no such specific rule regarding board member rotation and about timing. However, this issue is mostly addressed in the Trust Deed or Memorandum of NGO. If there is a clause in your Memorandum or Trust Deed regarding change or rotation of Board Members, you must follow it strictly.

Of-course, it is beneficial

It is not mandatory to rotate board members of NGO, but the benefits of such policy are very obvious that one should follow this practice. First and foremost, it shows good governance prevail in your NGOs, if you have rotation policy at regular interval. Second, it gives impression that, your NGO is having separate identity than only one or two individual founder members. It gives NGO more life span, when second generation leaders are trained this way.

Rotation or Change?

Depends upon the scenario and what mentioned in Trust Deed. However, only changing designation of same persons over years will definitely gives sense to Donor about just implementing policy on paper and not in true senses. Thus, it is better to have a proper policy for mixture of both rotation and change.

What is best “Board Rotation Policy”

The best policy is one which include robust period for the person to be in the board of the trust. Good boards should always have agreed terms of office so that there is a regular turnover of trustees and boards remain vibrant. Two terms of three years with a review at the end of the first term is fairly typical. NGOs should adopt this as best practice.

Let the world knows – Disclouser

Once you have a policy for board rotation in your NGO, it is best practice to put the same in your Annual Return under some Compliance or Good Practice page.

Hope this will help you in your NGO, if you have any question,  you can ask here or chat with us. Also your comments are welcome on the above subjects.

 

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Final Part – How to get Income Tax Refund of NGO Quickly

Before moving into final part of blog on the series of “How to get Income Tax Refund of NGO quickly ?” , lets revise earlier procedures. First of all you need to check refund status and find out for which year/years refunds are pending. (Click here to know procedure for refund status). Then, check whether your refund/return has been processed properly or not. This is very important step. (Click here to check intimation u/s. 143(1)) 

Final procedure to get Income Tax Refund of NGO quickly

So, once you checked that refund you claimed in the return and processed is same, you can submit request for re-issue of Refund. Follow following steps :-

Step 1 : Login to Income Tax Website – https://www.incometaxindiaefiling.gov.in/home

Step 2 : Go to “My Account” -> “Service Request”

Step 3 : Click on “New Reuest” -> “Refund Reissue” and click “Submit” button.

Step 4 : Select the year for which you need to re-issue refund.

Step 5 : Fill the Correct Bank details

Hopefully, you will get the refund amount in the bank account you have given within 15 to 20 days. If you want to know more about this or other technologies, follow the Tech News from TechSmash.net. Hope this will be helpful to your organization. If you have any query or any other problem, write in the comment section of this blog or email to us.

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How to get Income Tax Refund of NGO? – Part2

We have already seen in last blog that, how to check status of refund of your NGO for years.

How to get Income Tax Refund of NGO quickly?

Once, you list out which years Income Tax Refund of NGO not received, we need to find out the reasons for the holding of such refunds. There are reasons behind holding you return, some of them mentioned below –

  1. Mismatch of Bank Details given in return
  2. Case transferred to AO for scrutiny
  3. Refund is adjusted against demand of Assessment Year or Years
  4. Errors in Income Tax Return
  5. Mismatch of TDS claimed in Return with 26AS

Intimation U/s 143(1)

To follow up for refund, one of the important document is “Intimation u/s. 143(1)”. After processing Income Tax Return of your NGO, department generally informed you about this in the form called “Intimation u/s. 143(1)” . This document is emailed to email addressed you mentioned in the ITR. This is important to find out how your Return is processed and what errors are generated and why refund is pending. It looks like this.

There is basically comparison between what you have filled in your ITR and how it is processed at IT department. There has to be same figures for both the columns. What is important is point no 49, which states REFUND. See below :-

If this two figures are same (Department column may be more because of Interest), It means your Income Tax Return is processed properly.  If you have not received to your address, you can even request to send it again.

Request for re-issue of 143(1) Intimation

This is how you can request for re-issue of intimation of particular years.

Step – 1 : Go to https://www.incometaxindiaefiling.gov.in/home

Step -2 : Login with your password

Step -3 : In “My Account” click on “Service Request”

Step -4 : Now select “Request Type” – New Request and “Request Category” – Intimation 143(1)

Step -5 : Click Submit, then enter as below:

Return Type – Income Tax

Assessment Year – As per your excel

Category – Intimation U/s. 143(1)

Sub Category – Resend by Email

Step -6 : Click Submit. Within 2 to 10 days, you will receive an email form Income tax department with attached 143(1) Intimation.

 

So, once you compare all the years Income Tax Refund, which are pending, with 143(1) intimation, you need to now request for re-issue of Refund.

Coming Soon – Part 3 How to request for re-issue of Refund of NGO

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How to get Income Tax Refund of NGO quickly?

Income Tax Refund of NGO

Mostly, TDS is deducted by Banks on the Interest income of NGO. As, NGOs / Trusts are having 12A certificate of Income Tax Exemption, there is no tax on income of NGO and thus all TDS amount is to be refunded by Income Tax Department. However, due to technical and other problems, Income Tax Refund of NGOs are pending with the IT Department for many years. Lets have a look on how to get Income Tax Refund of NGO quickly. But before that you need to first make sure Income Tax Return of your NGO is properly filled in ITR7 form.

All you need to know about Income Tax Return of NGO – ITR7

Also need to check which years refunds are pending and why. So lets find out how to check status of refund of ngo.

There are two ways to check Income Tax Refund of NGO

1) from NSDL Website.

Go to this website : https://tin.tin.nsdl.com/oltas/refundstatuslogin.html , enter your PAN, Assessment Year and Captcha.

 

It will show you the status of your Refund. If Refund is already issued,it will show date when refund is credited to your Bank Account. If your refund was send by Department, but due some errors like wrong Bank Account Number or any such technical issues, it was returned and not credited to your Bank Accounts. In such a case you have to apply for re-issue of Refund. Third possibility is that your case is transferred to AO for scrutiny and thus refund is on hold.

2) With your login ID and Password

If you have login ID and Password of Income Tax Website, you can login and check status from there. If you do not have password, ask to your CA or consultant who has filled your online return.

Importnat Tip

You must keep password of your Income Tax Website with you. Never allow to give email or phone of your CA in your NGO return.

 

Go to this website :- https://www.incometaxindiaefiling.gov.in/home and login with UserID (your NGO PAN) and password.

Go to “My Account” button and click on “Refund/Demand Status”. Under this tab it will display Assessment Year, Status, Reason (for Refund Failure if any) and mode of payment.

Conclusion

Do not only rely on your CA or consultant for Income Tax Refund of NGO. Check your status of refund as mentioned above. In my next blog I will show you steps on how to get refund quickly, after checking refunds of which years are pending.

How to get Income Tax Refund of NGO quickly? – Part 2

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5 Points to keep in mind while operating FCRA Bank Account

There are very strict rules regarding using Foreign Funds under FCRA (Foreign Contribution Regulation Act). Also, FCRA department has already cancelled licenses of many organization on the basis of non-compliance of rules and provisions of FCRA.

As per sec 17 of this Act, every NGO who has been registered under FCRA, has to open a separate Bank Account for receiving and utilizing foreign funds. Let us look at some of the 5 points you should keep in mind while operating FCRA Bank Account.

(1) Do not mix FC & NonFC Funds

Do not receive any funds other than foreign funds to your FCRA Bank Account. You can receive funds in Indian Rupees if it comes from foreign source. Utmost care should be taken while depositing cheques or giving bank account numbers to donor.

 

(2) Interest linking of FDs

You need to instruct very clearly to Bank regarding linking of FDs with your Bank Account. Care should be taken that only FDs from FC funds link with your FCRA bank account so as to receive interest in that bank account only.

 

(3) Online Donation

If you are accepting Donation online through your website or crowd funding website, your payment gateway should be capable of transferring FC money to FC Bank Account and NonFC money to NonFC Bank Account.

 

(4) Time Barred Cheques

Your accounting system should be such that at the every month, all the cheques which are time barred will be cancelled and reversed in the books of account automatically. Otherwise, what happen, in FCRA return expenses were reported, while your balance in FC bank accounts not reduced that much.

 

(5) Sub – FC (Utilization) Bank Account

If you have open a Sub-FC Bank Account for project utilization, do not accept funds directly in that bank account. You have to accept FC funds in Main FC account always and then transfer to Sub-FC Bank Account.

 

Hope this will help you in your NGO, if you have any question,  you can ask here or chat with us. Also your comments are welcome on the above subjects.

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