For most NGOs, two Income-tax approvals matter: 12AB and 80G. Think of 12AB as the badge that lets the organisation itself claim tax exemption on its income under sections 11 and 12, while 80G is what lets your donors claim a deduction for eligible donations. In practice, new or existing trusts and societies now apply on the Income-tax e-Filing portal using Form 10A or Form 10AB (depending on whether it’s a first-time/provisional application, a renewal, or a change in objects). Once the application is examined, the department issues an order—Form 10AC or 10AD—with a unique registration number (URN). Regular approvals under 12AB typically run for five years, while provisional approvals for brand-new entities run for three years before being converted to regular registration after activities begin. The law that governs this process sits in section 12A(1)(ac) and section 12AB; 80G approvals ride on section 80G(5). For donors, one simple but important cap applies: no deduction is allowed if a cash donation exceeds ₹2,000 (section 80G(5D)).
1) Why 80G and 12AB matter
12AB: Registration that enables a charitable/religious trust or institution to claim exemption of income under sections 11 & 12. Mandatory if you want section 11–12 benefits.
80G: Approval that enables donors to claim deduction for donations made to you (subject to conditions like the cash limit).
2) Legal framework
Section 12A(1)(ac) (categories & timelines for applying) and Section 12AB (procedure, inquiry, grant of registration, validity, cancellation).
Rule 17A (documents to attach; Form 10A/10AB mapping).
Section 80G(5) (conditions for approval; donor deduction mechanics) and Rule 11AA (procedure under 80G).
Forms 10A / 10AB / 10AC / 10AD (apply / renew; order formats and URN issuance).
Donation reporting: Form 10BD (statement) and Form 10BE (certificate to donors) under Rule 18AB; due date: 31 May following the FY.
Audit: Section 12A(1)(b) + Rule 17B/Rule 16CC → Form 10B/10BB (AY 2023-24 onwards, as applicable).
Return filing: ITR-7 under section 139(4A), etc.
Accreted income tax on cancellation/ conversion: section 115TD.
Cash-donation cap for donors’ deduction: 80G(5D) → no deduction if cash > ₹2,000.
3) What you actually apply for (and when)
A. 12AB registration (exemption for your income)
Forms & timelines (high level)
Form 10A (initial/provisional or first revalidation); Form 10AB (renewal/regularisation/change in objects/other specified situations). Rule 17A also ties specific sub-clauses of 12A(1)(ac) to the correct form.
Validity:
Provisional: 3 years (granted for new entities).
Regular: 5 years (renewable).
Key trigger windows under 12A(1)(ac) include: renewal at least 6 months before expiry; conversion of provisional to regular within 6 months of commencement of activities or 6 months before provisional expiry (whichever earlier); 30 days to reapply when objects are modified in a way not conforming to existing registration.
Order & URN
Orders are issued in Form 10AC/10AD with a 16-digit alphanumeric URN.
B. 80G approval (deduction for your donors)
Applied alongside 12AB (same application rail) and governed by 80G(5) and Rule 11AA.
Validity typically 5 years (renewable with 10AB).
4) Document checklist (Rule 17A what to upload)
When you file Form 10A/10AB, Rule 17A prescribes the attachments, for example:
Self-certified trust deed/formation instrument, or document evidencing creation if no instrument.
Registration with RoS/RoF/Registrar of Public Trusts (as applicable).
Objects modification documents, if any.
Past financials (up to 3 years, if existed).
Note on activities.
Existing 12A/12AA/12AB order or rejection order, if any.
Tip: Ensure the e-filing profile, address, PAN, bank, and authorised signatory details are current before you start. (Forms are e-verified by the person authorised under section 140.)
5) Step-by-step process (what happens on the portal)
Apply on the e-Filing portal with Form 10A or 10AB, attaching Rule 17A documents. E-verify.
Departmental verification (statutory inquiry): the PCIT/CIT(E) may call for additional documents/make inquiries to satisfy (A) genuineness of activities and (B) compliance with other material laws. This is explicitly provided in section 12AB(1)(b)(i).
Order & URN: If satisfied, the department issues approval (10AC/10AD) with the 16-digit URN; otherwise it may reject (after opportunity of being heard). Timelines for orders: 12AB requires orders to be passed within 3 months / 6 months / 1 month depending on the clause invoked—see 12AB(3).
6) Ongoing compliance after you get 12AB/80G
Core annuals (income & audit)
ITR-7 under section 139(4A) (and allied sub-sections, as applicable).
Audit report if required by 12A(1)(b): Form 10B or 10BB (AY 2023-24 onwards, applicability driven by Rule 17B/Rule 16CC).
CBDT guidance clarifies when 10B vs 10BB is to be used (e.g., specific thresholds, foreign contribution, overseas application of income, etc.).
Donation reporting (mandatory under 80G)
File Form 10BD (statement of donations) and issue Form 10BE to donors by 31 May following the FY. E-verification is required.
Donor-side restriction: no 80G deduction for cash donations exceeding ₹2,000 (section 80G(5D)).
Governance & “specified violations”
Registration can be cancelled for “specified violations” (e.g., non-genuine activities; application of income for non-charitable objects; non-compliance with other material laws that has attained finality). See section 12AB(4).
If registration is cancelled or the entity converts/merges in certain ways, section 115TD imposes tax on accreted income. Plan governance and changes with this in mind.
7) Key conditions & practical guardrails
For 12AB exemption (sections 11–12)
Spend at least 85% of income on charitable/religious objects each year (accumulation under section 11(2) has separate conditions—outside the scope of this brief).
Keep investments only in modes specified under section 11(5); ensure compliance with sections 13(1)/(2) to avoid forfeiture of exemption.
For 80G approval (donor deductibility)
Comply with 80G(5) conditions (accounts, objects, restrictions, etc.) and the Rule 11AA procedure.
Ensure accurate and timely 10BD/10BE; donor Schedule 80G in ITR hinges on your reported data.
8) Document verification—what officers typically look for (statutory basis)
Objects & genuineness of activities: project notes, activity reports, beneficiary proofs, board minutes, photos, MOUs—tested under 12AB(1)(b)(i)(A).
Compliance with other material laws (e.g., FCRA, state trust/society law, education/health licences): tested under 12AB(1)(b)(i)(B). Upload registrations, approvals, and any inspection reports.
Financial trail: books, bank statements, ledgers tallying with activity outlays and modes under section 11(5); earlier 12A/80G orders if any (per Rule 17A attachments).
Order timelines & outcome follow 12AB(3) (grant/reject within statutory months) with speaking orders in 10AC/10AD (with URN).
9) Common lifecycle events you must not miss
Renewal: file 10AB well before the 5-year expiry as mandated in 12A(1)(ac).
Provisional → Regular: convert on time once activities begin.
Change in objects: reapply within 30 days if the modified objects don’t conform to the existing registration conditions (12A(1)(ac)(v)).
10) Benefits—summarised
12AB: Access to sections 11–12 exemption, subject to annual compliance (audit/ITR-7) and investment/application conditions.
80G: Greater fundraising leverage; donors can claim deductions (subject to category limits and the ₹2,000 cash rule), backed by your 10BE certificates and 10BD reporting.
11) Quick implementation checklist (practical)
Map your case to the correct 12A(1)(ac) clause; use Form 10A or 10AB accordingly; prepare Rule 17A attachments.
Keep governance artefacts ready for potential 12AB inquiry (genuineness & other-law compliance).
Post-approval, calendarise ITR-7, 10B/10BB, 10BD/10BE (31 May), and the renewal window.