Section 12A of Income Tax Act

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Section 12A of Income Tax Act

It can be difficult to navigate the complexities of the Indian tax system, particularly for nonprofits striving to change the world. However, understanding provisions like Section 12A of the Income Tax Act can prove immensely beneficial.

Under Section 12A of the Income Tax Act of 1961, non-profit groups such as charitable trusts, societies, non-governmental organisations, religious institutions, etc., are qualified for tax exemptions. The belief that non-profit organisations prioritise social good over profit led to the creation of this tax exemption.

The non-profit must register under section 12A to claim exemptions under sections 11 and 12 of the Income Tax Act.

Continue reading to learn everything about Section 12A registration under Income Tax Act and more.

What is Section 12A of the Income Tax Act?

Section 12A of the Income Tax Act pertains to the registration and conditions for charitable trusts and institutions avail of the tax exemption. This provision allows such entities to register themselves with the Income Tax Department to claim tax benefits.

To qualify for registration under Section 12A, organisations must adhere to certain conditions, including operating exclusively for charitable or religious purposes, ensuring that their income is applied towards these objectives, and maintaining proper records of their activities and finances.

Once registered, these entities become eligible for tax exemption, thereby encouraging philanthropic endeavours and promoting social welfare initiatives.

This provision plays a crucial role in incentivising and regulating the activities of charitable organisations, fostering a culture of giving and social responsibility within the framework of the tax laws.

Eligibility for 12A Registration

  • The organisation must fulfil the Income Tax Act's definition of a charity purpose in order to be eligible for registration under Section 12A. Activities aimed at protecting the environment, aiding the underprivileged, providing education, and providing medical care are all considered charitable purposes. A public utility's pursuit of any other goal is equally acceptable as a charity purpose.

  • The major qualifying criterion will be whether the assessee's activities entail a profit motive. Registration must be issued unless there is a profit motive.

  • The facility provided by this section is limited if the assessee is engaged in trade or commerce-related activities. In these situations, registration is only approved if the trading activity's revenues account for less than 20% of the assessee's overall revenues.

  • Private or family-owned trusts and charities are exempt from this Act.

  • Organisations and trusts that satisfy the conditions to register under Section 12A of the Income Tax Act must submit Form 10A online.

Steps for Filing 10A Form Online

These - Steps make it simple to file Form 10A online:

  • Step 1: Access the e-filing portal of the Income Tax Department.

  • Step 2: Login by using your credentials, such as your ID and password

  • Step 3: Click the "e-file" tab and choose "Income Tax Forms" from the menu below.

  • Step 4: Choose Form 10A from the "Form Name" field.

  • Step 5: Choose the appropriate "Submission Year" and "Assessment Year."

  • Step 6: Fill in the necessary information and double-check it.

  • Step 7: Select the "Submit" option

Note:** It is important to remember that merely submitting Form 10A does not ensure registration under the Section 12A of the Income Tax Act. The Commissioner must verify the application. The Commissioner must verify the application, and applicants must submit the necessary documents to complete the verification procedure.

Documents Required for 12A Income Tax Registration

  • A document proving the establishment of an institution or the trust.

  • Registration with the RoC

  • Documents that prove the adoption or alteration of things.

  • Annual financial reports for trusts or entities.

  • An existing order providing authorisation to register under Section 12A or Section 12AA.

  • A list highlighting the trust or institution's activities.

  • An order rejecting the application for registration under either Section 12A or the Section 12A.

Procedure for 12A Registrations

  • The assessee must apply in the relevant format online. After the application is submitted, the Commissioner may request that the applicant provide additional information or documents as needed.

  • If the Commissioner is satisfied with the application, they may issue a written decision indicating that the assessee is eligible for registration under the section. The written order goes to the assessee. Following receipt of the order, the assessee may get the right of registration under the section.

  • If the commissioner is not pleased with the application, the application can be rejected. The assessee is informed in writing about the basis for the denial.

  • It is also important to understand that once a trust is registered, it has lifetime validity, making 12A registrations a one-time process. However, in extraordinary cases, the commissioner may cancel it.

Difference between 12A and 12AA

Section 12A pertains to the initial registration process for entities desiring tax exemption under specific categories, such as charitable or religious institutions. The Income Tax Department recognizes these entities and allows them to claim tax benefits.

On the other hand, section 12AA of the Income Tax Act addresses the subsequent stage, where the tax department evaluates the organisation’s activities and objectives to ensure they align with the provisions for tax exemption.

Essentially, while section 12A facilitates registration, section 12AA validates and confirms the eligibility of the organisation for continued tax exemption status based on its operations and compliance with relevant regulations.

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Related Articles

What is a 12A certificate, and why is it important for NGOs and charitable organisations?

What is a 12A certificate, and why is it important for NGOs and charitable organisations?


A 12A certificate, issued under Rule 12 of the Income Tax Rules 1962, grants tax exemption to non-profit organisations, ensuring that their income is not subject to taxation. It is crucial for NGOs and charitable organisations as it allows them to utilise their resources more effectively for their philanthropic activities without the burden of taxes.

What are the conditions for obtaining a 12AA certificate for a trust?


To obtain a 12AA certificate, a trust must ensure that its objects and activities are exclusively charitable or religious in nature and the income generated, if any, is applied for charitable or religious purposes only.

What is Form 12A in Income Tax?


Form 12A is an application for registration under Section 12A of the Income Tax Act. It is submitted by entities seeking tax exemption for their income derived from charitable or religious activities.