In the context of the Indian Income Tax Act, 80G and 12A (often referred to as 12AA or 12AB) are the two most critical registrations for Non-Governmental Organizations (NGOs), charitable trusts, and Section 8 companies.
While they are often mentioned together, they serve two very different purposes: one benefits the organization, and the other benefits the donor.
Comparison: 80G vs. 12A (12AA/12AB)
| Feature | Section 12A / 12AA / 12AB | Section 80G |
| Who benefits? | The Organization (NGO/Trust). | The Donor (Individual/Company). |
| Primary Purpose | Exempts the organization’s income from tax. | Allows the donor to claim a tax deduction. |
| Is it mandatory? | Yes, to avoid paying tax on surplus income. | Optional, but essential to attract donors. |
| Prerequisite | None (this is the first step). | You must generally have 12A/12AB first. |
| Registration Form | Form 10A (Provisional) / 10AB (Regular). | Form 10A (Provisional) / 10G / 10AB. |
Detailed Breakdown
1. Section 12A / 12AA / 12AB (Tax Exemption for the NGO)
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What it does: Without this, any “profit” or surplus an NGO has at the end of the year is taxed at standard corporate rates. With this registration, the income is 100% exempt from tax, provided the funds are used for charitable purposes.
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The “AA” vs “AB” Confusion: * 12A: The original section.
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12AA: The section used for registrations between 1996 and 2021.
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12AB: The newest section introduced in 2020. Now, all NGOs must re-register under 12AB. There is no longer “permanent” registration; it must be renewed every 5 years.
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2. Section 80G (Tax Benefit for the Donor)
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What it does: This is a “certificate of trust.” When a person or company donates to an 80G-certified NGO, they can deduct 50% or 100% of that donation amount from their own taxable income.
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Why it matters: Most corporate donors and high-net-worth individuals will only donate to organizations that have an 80G certificate because it saves them money on their own taxes.
Summary for Organizations
If you are starting a trust or NGO, you should apply for both simultaneously.
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12A ensures you keep your money to do good work.
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80G makes it attractive for others to give you more money.
Note: As of the latest 2020/2021 amendments, the Income Tax Department initially grants Provisional Registration for 3 years to new organizations. After you actually start your charitable activities, you must apply for Regular Registration (valid for 5 years).