12A/80G Registration & 12AB Re-registration: Who Needs It and Who Does Not
Whether 12A/80G Registration & 12AB Re-registration applies to a given business is the first thing worth settling, and it is where most of the early questions land. The questions below are the ones raised most often in practice; the full scope of the service is on the 12A/80G Registration & 12AB Re-registration page.
What changed after the Finance Act 2020 — do existing registrations still apply?
The Finance Act 2020 fundamentally restructured the income-tax exemption framework for charitable organisations, effective from 1 April 2021. Section 12AA (the previous registration provision) was replaced by Section 12AB. All organisations that held 12A or 12AA registrations were required to apply for fresh registration under Section 12AB by 30 September 2022 (extended from earlier deadlines). If they did not re-register, their prior exemption lapsed. The new regime introduces: provisional registration first (3 years), then regular registration (5 years, renewable — extended to 10 years for smaller organisations under the Finance Act 2025), and mandatory Form 10BD filing for donor certificates. 80G approvals were similarly renewed under the new framework, and continue on a fixed 5-year cycle irrespective of the 12AB validity period.
In practice: Older trusts and societies whose 12A registrations were granted in the 1990s and 2000s may be unaware of the mandatory re-registration deadline. The lapse may come to light only when a donor queries the registration's validity. If your registration is pre-2021 and you have not yet re-registered, this is urgent — you may be operating without a valid exemption and donors' 80G claims may not be valid.
What is 'charitable purpose' under the Income-tax Act — does my organisation qualify?
Section 2(15) of the Income-tax Act defines 'charitable purpose' to include relief of the poor, education, yoga, medical relief, preservation of environment (including watersheds, forests, and wildlife), preservation of monuments or places or objects of artistic or historic interest, and advancement of any other object of general public utility. The last category ('general public utility') has an important rider: if the organisation carries on any activity in the nature of trade, commerce, or business, or provides any service in relation thereto for a fee or cess or other consideration, the receipts from such activity in the previous year exceed 20% of the total receipts of the organisation, then it will not be treated as a charitable institution for that year.
In practice: The 20% commercial activity limit is a live compliance issue for organisations that charge fees for training, consultancy, or services alongside their core charitable work. We evaluate this ratio every year as part of our annual compliance review — exceeding the threshold in a year can disqualify the exemption for that year even if registration is valid.
What is provisional registration — and how is it different from regular registration?
Provisional registration under Section 12AB is granted to newly formed organisations (less than 3 years old) or organisations applying for registration for the first time. It is valid for 3 years from the date of application (Form 10A). It gives the organisation the ability to operate as a tax-exempt entity while establishing a track record. Provisional registration is granted before the organisation has a track record; the track record and audited accounts are examined when it applies for regular registration in Form 10AB, which must be filed within six months of commencing activities or at least six months before the provisional registration expires, whichever is earlier. For organisations that had existing 12A/12AA registrations before 2021, the Finance Act 2020 required them to re-register under a slightly different Form 10AB track.
In practice: A critical point many founders miss: provisional registration means your income is exempt during the provisional period, but the CIT(E) reviews your track record and accounts before granting regular registration. If the organisation has not genuinely conducted charitable activities during this period — if it has been dormant or has only distributed funds without its own programme activities — the application for regular registration will face difficulty.
What is Form 10BE — how do I issue it to donors?
Form 10BE is the donation certificate issued to each donor under Section 80G. After the organisation files Form 10BD by 31 May, the Income Tax portal generates individual Form 10BE certificates for each donor listed in the Form 10BD statement. The organisation downloads these certificates and provides them to donors — who attach them to their income tax returns as evidence of the donation. Form 10BE includes the organisation's name, 80G registration number, donor's PAN, donation amount, and date. Physical receipts no longer serve as valid documentation for 80G claims.
In practice: We manage the entire Form 10BD/10BE cycle for our NGO clients as part of the annual compliance package. The filing requires careful data reconciliation — donor PAN must be exactly correct, donation amounts must match internal accounts, and the distinction between corpus and general donations must be accurately reflected. Errors in Form 10BD require correction filings (Form 10BD revised), and the corrected Form 10BE must be re-issued to affected donors.
Does 12AB exemption cover all income — or only some types of income?
Section 12AB exemption covers income received by the organisation from any source, provided it is applied or accumulated for the charitable objects stated in the governing document, within the limits prescribed by the Act. Specifically: general income applied for charitable purposes in the same year is fully exempt. Income accumulated for future application must be invested in the modes specified in Section 11(5) — government securities, bank fixed deposits, post office schemes, and other permitted instruments. Corpus donations are separately treated — they are not treated as income in the year received, but must also be invested in Section 11(5) modes. Business income — from any activity carried on by the organisation in the nature of business — is exempt only if the business is incidental to the charitable objects and separate books are maintained.
In practice: Up to 15% of income may be accumulated under Section 11(1)(a) without filing any form and without a time limit. For amounts above 15% that an organisation wishes to accumulate for a specified charitable purpose, Form 10 must be filed under Section 11(2) before the due date for filing the return, and such accumulation is permitted for up to five years. Form 9A is used separately to defer the application of income to the following financial year. For tax year 2026-27 onwards these provisions are re-enacted under the Income-tax Act 2025 with new section numbers, and the prescribed forms may also carry new numbers, so confirm the current references before filing. Failure to comply with the accumulation rules is one of the most frequent grounds for demand notices on 12AB-registered entities.
Is a statutory audit mandatory for 12AB-registered organisations?
The audit report must be filed before the ITR-7 due date. The audit covers income, expenditure, application for charitable purposes, investments, and compliance with the conditions of 12AB registration.
In practice: The audit is not merely a procedural formality — the auditor specifically certifies whether income has been properly applied to charitable purposes, whether the 15% accumulation limit has been respected, whether corpus investments are in permitted modes, and whether any activities are in the nature of trade or business. The audit report is the document that the CIT(E) reviews at regular registration renewal.
Can a trust or NGO pay salary or remuneration to trustees or founders?
Yes — reasonable remuneration to trustees who work for the organisation is permissible and does not violate the non-distribution condition of Section 12AB. The key word is 'reasonable' — it must be commensurate with services rendered and not amount to a disguised distribution of surplus. The governing document should ideally permit trustee remuneration and specify the process for determining it (typically a managing committee resolution). Disproportionate remuneration to trustees — particularly when the majority of trustees are family members — will be scrutinised by the CIT(E) as evidence of private benefit.
In practice: We recommend documenting trustee remuneration with a formal resolution of the governing body each year, an employment letter or consultancy agreement, and TDS deduction on amounts above the TDS threshold. Undocumented payments to trustees are a significant red flag at audit and at CIT(E) review.
Can a Section 8 Company (not-for-profit) obtain 12AB and 80G registration?
Yes. A company licensed under Section 8 of the Companies Act 2013 is a separate legal entity incorporated for charitable, educational, scientific, religious, or similar objects, with profits reinvested in the organisation rather than distributed to members. Section 8 companies are fully eligible for 12AB and 80G registration under the Income-tax Act. In fact, Section 8 companies are often the preferred vehicle for CSR-receiving organisations and institutional grant recipients — the MCA regulatory framework, annual public filings, and mandatory statutory audit provide a transparency framework that corporate donors find more credible than unregistered trusts.
In practice: A Section 8 company has the additional compliance overhead of MCA filings — AOC-4, MGT-7, and director-level compliance including DIR-3 KYC. We manage both the income-tax compliance (12AB audit, ITR-7, Form 10BD) and the MCA compliance (annual filings) for Section 8 company clients under a single retainer — you do not need a separate CA for each.
Can our organisation run a training centre, school, or hospital and still maintain 12AB status?
Yes — educational institutions (schools, colleges), medical institutions (hospitals, clinics), and training centres can hold 12AB registration, provided that: the activities are genuinely charitable (not conducted for the purpose of earning profit), any fees charged are kept at a level that does not give the activity a commercial character, and the 20% limit on business-type receipts applies only to the general public utility head and not to education or medical relief. For educational and medical institutions, specific provisions under Sections 10(23C) and 11 apply depending on whether the institution is below or above the annual receipts threshold.
In practice: We assess which framework applies to each institution at the outset.
Where this sits in the wider engagement
12A/80G Registration & 12AB Re-registration rarely arrives on its own. The statutory basis and the current requirements are set out on the 12A/80G Registration & 12AB Re-registration service page, and the related services are grouped under Business Setup.
What PNPC does
PNPC Global has practised since 1986 across India and the UAE. On 12A/80G Registration & 12AB Re-registration we take the work end to end — reviewing the facts, preparing and filing what is required, and dealing with the authority through to closure.