Introduction:
While it is not difficult to set up a trust or an NGO, running a charitable organisation requires knowledge of legal, financial and other matters. This includes compliance with laws relating to registration, accounting, taxes, and reporting.
Persons, professionals, businesspersons, entrepreneurs, and organisations planning to start a charitable activity in the long-term, can consider NGO registration Bangalore as the first step towards establishing a charitable organisation.
There are different structures, such as trusts, societies, and section 8 companies, through which a charitable organisation can be established depending on the objectives of the organisation. Registration and approval for income tax and other exemptions are separate and are determined by the activities of the organisation.
There are several other sections of the Income Tax Act that grant registration and exemptions to charitable organisations.
Thus, setting up a trust or an NGO requires a lot of planning and foresight; therefore, it is always prudent to take the help of a professional.
What is Trust and NGO Registration?
The term “trust and NGO registration” is used to denote the process of obtaining registration for a charitable organization.
The long-term objectives and the nature of activities to be undertaken by the organisation determine the type of charitable organisation to be set up. It could be a public trust or a registered society or a Section 8 company, etc.
People wanting NGO registration in Bangalore should know that the process for entity registration and the process for income tax registration are separate.
Separate registrations and approvals may be required for accounting and auditing and for income tax and donation reporting, amongst others.
Understanding 12A/12B and Other Current Tax Registrations
Prior to amendments to the Income Tax Act, 1961, the expressions 12A and 12AB referred to the process for registration for income tax exemptions available to trusts and societies, among others.
Under the current act, similar registrations are available to trusts, societies, and other nonprofit entities. For instance, a nonprofit may be granted provisional registration if it has not initiated its activities through an application in Form 104. To obtain regular registration, the entity must comply with the provisions of the Act, as detailed in Form 105.
In a nutshell, entity registration facilitates a nonprofit availing tax exemptions and benefits as mandated by the law. Registration does not, however, imply that a non-profit has been granted an absolute and unrestricted tax exemption.
Section 80G of the Income Tax Act, 1961
This Section provides for tax deductions to be given to individuals for donations made to certain charitable trusts and institutions and other approved entities. The Income Tax Department specifies the rates at which donations made to charitable trusts and other organizations are eligible for deduction, which may be up to 100% of the donation. Cash donations exceeding ₹2,000 are not eligible for a deduction under this section.
Section 80G of the Income Tax Act exempts NGOs from certain taxes; however, it is more correctly regarded as a tax reduction for individuals or corporations making contributions to the NGOs.
This is of interest to trustees, founders, employees, and the high net worth individuals (HNIs) who are the traditional supporters of NGO activities.
There are numerous other advantages of obtaining the right tax registrations and approvals,, including, but not limited to:
- Enhanced confidence of prospective donors to give to the organization
- Availability of tax deductions to donors for donations made to the organization
- Better assurance of compliance with tax laws and regulations
- Improved transparency as to the financial position of the organization
- Improved ability of trustees to understand how and when donated funds are received and utilized
- Improved capacity of the organization to plan how it raises funds and carries out its charitable activities
- Improved ability of the organization to plan its personnel, financial, accounting, and auditing activities
Who is This Service For?
This service is for those wanting to:
Create a charitable trust.
Initiate an NGO.
Assist their HNI/UHNWI clients for their philanthropic activities.
Initiate a corporate or family charitable trust/foundation.
Initiate a social or impact (including not-for-profit) enterprise.
Initiate a not-for-profit enterprise.
obtain tax registration
review or appeal for reinstatement of their 80G/12A/12AB certificate
NRI’s undertaking charitable activities in India
Understand the requirements for income tax compliance and registration under the Companies Act.
In case you wish to set up a charitable trust/NGO:
Visit the office of the Charity Commissioner and obtain the forms for registration.
Complete the forms and submit the required documents.
Submit the trust deed before the charity commissioner.
A self-certified trust deed, proof of registration, and other supporting documents have to be submitted for new trusts/societies/NGOs for obtaining Form 104 from the Income Tax department.
The process for registration of an NGO:
Identify the activities to be undertaken by the NGO and obtain a registration certificate from the concerned authority.
Step 1: Determine Legally Acceptable Entity Type
Based on the nature and activities of the entity, determine the type of trust, society, company, or other legal entity that can be formed or established.
Step 2: Collect Documentation
Complete the trust or other legal entity documentation, including by-laws, rules or regulations, and other supporting evidence.
Step 3: Submit Documentation
Submit the documentation to the relevant authorities.
Step 4: Obtain Tax Registration, PAN, and Other Licenses
Obtain various licenses, permissions, registrations, and certifications required for the entity to begin functioning.
Step 5: Apply for Provisional Income Tax Registration
Apply for the Income Tax Department’s provisional registration and obtain a provisionally restricted registration letter. The applicability of restrictions will be determined in accordance with the Income Tax Act 2025.
The procedure for obtaining a provisionally restricted registration will be as per the present provisions of the Income Tax Act, 2025. As per the aforementioned provisions, Form 104 is used to apply for provisional registration, and Form 105 is used to apply for a full registration.
Step 6: Comply with Post-Registration Requirements
There are requirements, including the maintenance of donation records, the completion of annual returns and the engagement of auditors, that must be satisfied after registration.
Approved entities also have a requirement under the Income Tax Act to report donations received by them to the Income Tax Department via a reporting format and to issue a report in that regard to the donors. Under the 2025 Act, this requirement has also been preserved.
Changes in Income Tax Procedures and Forms
The procedure and forms for income tax have been changed from 1 April 2026, after the enactment of the Income Tax Act, 2025. You are advised to confirm the procedures and forms for the income tax for the relevant year.
Inadequate Accounting Records
Charitable entities are required to maintain details of their income and expenses, assets and liabilities, and the funds received and utilized by them.
Missed Deadlines
Lapses in filing reports, completing documents, and other omissions in meeting the statutory requirements would be a breach of the provisions of the law.
Believing Registration Provides Tax Benefits
Registration or approval is granted only after satisfying the provisions of the law. Continuance of compliance and proper application of funds is essential.
Why our services are essential
Setting up of a charitable entity is a complex process and requires us to appreciate several aspects of law, which may not be evident during the first instance.
How we can add value
A chartered accountant can assist and add value at various stages, including, but not limited to, the following:
- Deciding the appropriate structure for compliance.
- Reviewing the financial and tax effects of the proposed activities.
- Assisting in the drafting of the memoirs, articles of association, etc.
- Liaising with the income tax authorities for registration and approval.
- Handling the accounting and bookkeeping.
- Attending to the audit requirements.
- Complying with the requirements of taxes, donations, and other allied matters.
- Handling the liability for TDS and payroll.
- Dealing with various notices of the income tax authorities.
- Adopting other allied and related activities.
This is particularly relevant for the promoters of the charitable trusts who wish to devote their time to charity activities.
Why us?
Pavan Kumar & Co. is a Chartered Accountant firm, which was established on 1 September 1985. We offer various services, which includes tax and accounting services, GST, audit and assurance services, business and secretarial services, payroll and TDS services, litigation and NRI services, and financial planning. Our team consists of members, who have profound knowledge in various fields of finance and business, and are able to deliver services as per clients’ requirements. Our firm believes in adhering to the professional code of ethics, and our services are client centered, transparent and of high quality.
Our CA team helps understand and simplify compliance requirements for clients in Bangalore and throughout India.
- What is the difference between 12A/12AB and 80G?
Historically, registration under section 12A/12AB of the Income Tax Act allowed for income-tax exemption for trusts and societies carrying on charitable or religious activities. The process for 80G, on the other hand, allowed individual donors to claim an income-tax deduction for donations to eligible trusts and societies. The Income Tax Act, 2025, provides similar procedures for registration and approval from 1st April, 2026.
- Is 80G automatic for trusts after registration?
No. Trusts and societies are required to obtain approvals and comply with conditions specified under the 80G to entitle their donors for tax deductions. In addition, the donors are also obligated to satisfy conditions stipulated under the Income Tax Act to claim tax deductions.
- What are the documents required for trust registration?
It depends on the nature of trust and the registration process. However, in general, the documents may include trust deed, details of trustees and members, address proof, bank account details, registration certificate, PAN of the trust, activity of the trust, and other relevant documents.
- Is it necessary to approach a Chartered Accountant (CA) for trust registration?
Yes. It is advisable to engage the services of a CA, especially for review of legal and regulatory compliances related to the establishment of the trust.
Don’t solely rely on standard registration checklists when registering your NGO. The process is contextual to your NGO’s structure and the provisions of the Acts and rules that apply to your NGO for the relevant year.
There is variability in the nature and extent of obligations imposed on taxpayers. Depending upon the facts and circumstances of the case, an organization may be required to take professional advice and/or may be required to file returns and forms and apply for clearances.
This post/blog is for information purposes only and should not be construed as professional advice of any nature. For specific professional advice for your case, contact a chartered accountant of your choice.
We offer NGO registration, trust registration, and other related services. For tax compliance and other services, contact us at Pavan Kumar & Co.
Pavan Kumar & Co
Sannidhi, 26, RK Street, Jai Bheema Nagar, Seshadripuram, Bengaluru-560020
Phone: +91 98440 81653
Email: capavankumars@gmail.com