Following the law is not only important but it is also necessary in the case of any NGO that has 12A and 80G registrations. Such registrations give the NGO tax exemptions and tax deductions to its donors that greatly increase the legitimacy and ability of the organization to raise funds. With these advantages, there are responsibilities that must be met in order to keep the validity of the registrations. The details of a detailed legal compliance checklist a NGO needs to meet to ensure smooth and legal operation in India is provided below:
Timely Renewal of Registration
According to the changes in terms of the amendments in the Income Tax act, NGOs will henceforth be required to renew their 12A and 80G registrations. The period of provisional registration lasts three years, and NGO should make a renewal application at the least six months prior to the lapse. Permanent registrations also need a renewal after every five years. Failure to do so may lead to losses in benefits.
Filing Annual Income Tax Returns (ITR-7)
Every NGO with 12A and 80G registration is required to file Form ITR-7 annually, even if there is no taxable income. Filing ensures transparency in financial dealings and is mandatory under the Income Tax Act. Delay or failure in filing may lead to penalties and could impact the NGO’s registration status.
Audit of Accounts
If the annual income of the NGO exceeds the prescribed limit (currently ₹2.5 lakhs), it is mandatory to get the accounts audited by a certified Chartered Accountant. The audit report must be submitted along with the ITR-7 form. This audit proves that the NGO is utilizing its funds appropriately and strengthens donor confidence.
Filing Form 10B/10BB
A crucial compliance point for any NGO with 12A and 80G registration is the filing of Form 10B or 10BB, depending on the organization’s receipts. These forms must be filed electronically and accompany the income tax return. It’s advisable to complete this step well in advance of the due date to avoid last-minute technical glitches.
Maintenance of Proper Books of Accounts
Each NGO should keep well maintained and updated records of the financial transactions it has, such as amounts of donations or grants obtained, costs on the projects and costs covered by the administrative departments. Under the jurisdiction of an NGO that holds 12A and 80G the documents play an important role during audit and inspection checks and bring in the aspect of transparency with the donors and the regulatory bodies.
Compliance with FCRA (if applicable)
But when the NGO gets foreign contributions then also the Foreign Contribution Regulation Act (FCRA), has to be complied with. This involves FCRA registration, promptness on the part of annual returns (Form FC-4) and having a specific bank account to hold foreign funds.
Reporting to Donors
Transparency is vital. Issuing donation receipts that mention 80G benefits, along with timely updates on fund utilization, builds donor trust and supports continued contributions.
Conclusion
Obedience to the law forms a pillar to the success and sustainability of any NGO that has registration under 12A and 80G. Following the specified checklist above, NGOs not only keep the benefits of registration but also prove themselves as credible and clear organizations. Adherence does not only confer legal security to your NGO, but also increases its image value to the donors, stakeholders, and the general population.