FCRA Registration and Registering 12A or 80G – An Overview
The FCRA department comes under the regulation of MHA (Ministry of Home Affairs). It is deemed optional for trust/NGO/ Section 8 company.
To regulate the foreign contributions or hospitality received by any company, association, or even an individual, the government consolidated all the regulations and laws related to such transactions. For the same purpose, FCRA or Foreign Contribution (Regulation) Act, 2010 was introduced.
The FCRA Act is aimed at creating a transparent mechanism for organizations and individuals through e-governance of activities related to FCRA. This would discourage any detrimental activity against the National interest of India.
NGOs can register through 12A for tax exemption on any surplus funds they own and can also obtain the 80G certification to get the donor’s tax exception. Let us understand the benefits of these registrations.
Benefits of 12A, 80G, and FCRA Registration
- Taxation exemption for income of NGOs.
- Benefits in taking grants from abroad, government, and other agencies.
- Availing benefits of FCRA Registration.
- The donor of NGOs with 80G certification can enjoy the benefits of tax exemption on donation.
- It attracts more donations to the NGOs.
Benefits of FCRA
- Good for Reputation: FCRA registration is always going to help the reputation of the organisations. This also ensures that the NGOs gets transparent fundings from foreign entities.
- Compliance: FCRA registered entities are compliant with the norms for the regulation of foreign funding.
- Support from Government: If an entity is registered under FCRA then it gets ample supports from foreign government head offices and Indian agencies. In case, of any discrepancy related to foreign funds, these companies can easily reach the government to intervene and resolve the issues.
- Foreign Investment: This is self-explanatory as an FCRA registered entity gets ample financial support due to ease of foreign funding.
Eligibility for FCRA Registration, and Section12A, 80G
Following entities are not eligible for registration under FCRA:
- Fictitious or Benami entities are not allowed as they are generally created with an intent of fraud. Some of these entities do not exist in the provisions of law and thus are ineligible for registration.
- Applicants indulging in unfair activities which results in criminal convictions are not allowed to apply for the registration.
- Registration for a bankrupt or insolvent entity is not allowed.
- If the funds are used against public interest then the entity would not be allowed to register.
- Any entity that can affect the integrity and sovereignty of India won’t be allowed to register with FCRA.
Other norms for FCRA registrations:
- The entity should be registered under the Indian Trusts Act, 1882 or
- Under the Societies Registration Act, 1860 or
- Under the Companies Act, 2013 as Section 8 company.
An organisation should also meet these conditions for FCRA registration:
- The institution must be set up to cater to the charitable causes of serving society in sectors like education, health, art, religion, cultural, etc.
- It must not be prohibited under Section 3 of the FCRA Act, 2010.
Eligibility for Section 12A and 80 G
After registration of NGO and application for Section 12A exemptions and 80G certificate can be made immediately. These applications can be filed together or separately with the commissioner of the Income Tax Department who has jurisdiction over the organisation.
- Only Charitable trusts, religious trusts, Section 8 companies, and Societies can register.
- No private or Family owned trust can register.
- Charities prescribed under category 80G will have exemptions for the donor.
- NGO must be registered under the Income Tax Act.
- Charities with a business or religious angle won’t be included.
Process of applying for FCRA registration, Section 12A, 80G
- The process for registration is started by filing an online application on Form FC-3.
- Upload all the scanned copies of necessary documents and information ant the time of filing of online form.
- Before the previous steps, an NGO must get a DARPAN ID by registering of the DARPAN portal introduced by the NITI Ayog.
The long list of documents can become difficult to process and upload for the promoters. At MUDS companies can avail FCRA registration package to get this job done easily without any hassles. Our team ensures that the file is error-free and thus chances of application rejection are reduced.
FCRA registration is valid for 5 years from the date of issue of registration under the Income Tax Act. After this, the registration needs to be renewed. For prior permission, the certificate is valid for 5 years or the time till the foreign contribution is fully utilized.
- This is a one-time registration process but before applying for tax exemption under this certificate, an NGO must get registered under the Income Tax.
- The application will be made to Income Tax Commissioner with Form 10A. The application must contain the following data:
- Name, PAN details and address of trustees/managers;
- A certified copy of instrument (registration certificate) under which the institution/trust was established.
- A copy of MoA/AoA/Trust Deed as evidence of creation of such institute.
- After the application is submitted by the NGO in the format prescribed by the department, the Income Tax Commissioner will verify the details of the application. After successful verification, he will either ask for any other documents to complete the reviewal or if everything is perfect, he will pass the application. An order under the Section 12A of Income Tax Act will be generated for the NGO. The whole process of registration may take up to 3 to 4 months. Once registered the registration certificate is valid for a lifetime.
For Section 80G:
- The institution must first be registered under Section 12A to apply for Donor’s exemption under 80G.
- The application is made to Income Tax Commissioner under Form 10G.
- Application should be submitted with the required set of documents.
- After receiving the application, the Income Tax Commissioner will verify the application and may ask for some additional documents. On satisfactory review of all the documents and application the Commissioner will issues a written order or registration for the institution under Section 80G of the Income-tax Act. This application takes 3 to 4 months for successful disposal and the certificate is valid for a lifetime.