You registered the NGO. Now the two registrations that decide whether it — and its donors — pay tax.
Setting up a trust, a society or a Section 8 company is the easy part. What actually decides whether your non-profit keeps its money, and whether anyone who funds it gets a tax break, is a pair of registrations under the Income-tax Act that most founders treat as an afterthought: 12A (now 12AB) and 80G. They sound like a single formality and they are constantly confused, but they do two completely different jobs — one exempts the organisation's own income, the other rewards the people who donate to it. Since the law was rewritten, both run through a provisional-then-final regime on Form 10A and Form 10AB, both expire and must be renewed on a clock, and there is now an annual donation-reporting return without which your donors simply cannot claim. This is the guide to how 12AB and 80G actually work, the forms and the timelines, and the traps that quietly cost non-profits their exemption.
Two registrations, two entirely different jobs
Get this distinction right and the rest of the article falls into place:
- Section 12AB registration is about the organisation's own tax. Once registered, the income of the trust or institution becomes exempt under Sections 11 and 12 — the surplus it generates and applies to its charitable objects is not taxed. Without 12AB, your NGO is taxed on its surplus like any other entity, which defeats the point of being a non-profit.
- Section 80G approval is about the donor's tax. It does nothing for the organisation directly; it lets the people and companies who donate to you claim a deduction (generally 50%) on what they give. It is your single biggest fundraising asset, because donors ask for it before they write a cheque.
You apply for both, they are granted separately, and one can exist without the other — but a serious non-profit wants both: 12AB so it keeps its money, 80G so it can raise more.
Section 12AB: how the NGO's income becomes exempt — and the 85% rule
Registration under Section 12AB is the gateway to the exemption under Sections 11 and 12. But the exemption is conditional, and the condition is the one every non-profit has to live by: you must apply at least 85% of your income to your charitable objects in India during the year. Up to 15% may be accumulated or set apart without any conditions. If you want to accumulate more than that 15% for a specific future purpose, you have to declare it (in Form 10) and spend it within the permitted window, or it becomes taxable. In other words, 12AB does not let a charity sit on its funds — it exempts income that is actually being deployed for the cause.
Section 80G: the donor's deduction, and its two limits
80G is what a donor is really asking about when they ask "are you 80G registered?" For donations to a typical privately-run NGO, the deduction works like this:
- The 50% rate. The donor can deduct 50% of the qualifying donation from their taxable income.
- The 10% qualifying limit. The donation that qualifies is itself capped at 10% of the donor's adjusted gross total income. If someone donates more than 10% of their income, the excess above that ceiling is simply ignored for the deduction.
- The ₹2,000 cash rule. A donation over ₹2,000 paid in cash does not qualify at all. To be deductible it must be paid by cheque, bank transfer or another digital mode. This is the single most common reason a donor's 80G claim is denied.
So 80G is genuinely valuable to donors, but it is not unlimited, and the cash rule catches people out every year.
Form 10A vs Form 10AB: the provisional-then-final regime
Since the law was rewritten (post the Finance Act, 2020, with the regime effective from 2021), every non-profit — brand new or decades old — has had to come into a single system built on two forms, filed on the income-tax e-filing portal:
- Form 10A is for provisional or fresh registration. A new organisation that has not yet started activities gets a provisional registration valid for three years. (Form 10A was also the form on which already-registered trusts did their one-time re-registration under the new regime.) The order granting provisional registration is normally passed within one month from the end of the month in which you apply.
- Form 10AB is for converting provisional to regular, renewing a regular registration, or reporting a change of objects. Regular registration is valid for five years.
The key sequencing trap: to convert a provisional registration into a regular one, you must file Form 10AB at least six months before the provisional registration expires, or within six months of actually commencing your activities — whichever is earlier. Non-profits that wait until year three of their provisional registration, having already started work, often find the window has closed.
The renewal clock: six months before expiry, every cycle
These registrations are no longer "once and forever." A regular 12AB or 80G registration lasts five years and then has to be renewed, again on Form 10AB, and the renewal application must be filed at least six months before the current registration expires. If your registration runs out on 31 March 2026, your renewal should go in by 30 September 2025. Miss the renewal and the exemption lapses — with serious tax consequences for the accumulated corpus.
One relief arrived for smaller organisations: for applications made after 31 March 2025, the validity has been extended from five to ten years for trusts and institutions whose total income (before claiming exemption) did not exceed ₹5 crore in each of the two preceding years. Larger organisations stay on the five-year cycle.
The step everyone forgets: Form 10BD and Form 10BE
Getting 80G approved is not the end of the donor story. Since AY 2022-23, an 80G-approved institution must file an annual statement of donations in Form 10BD by 31 May following the financial year, listing every donation received donor by donor. It then downloads and issues a donation certificate in Form 10BE to each donor, also by 31 May.
This matters enormously, because the rules changed the basis of the claim: a donor can now only claim the 80G deduction if their donation appears in your Form 10BD and they hold your Form 10BE, which is matched against their tax records. An NGO that has 80G but never files Form 10BD is, in practice, an NGO whose donors cannot claim — and they will notice. (There is no minimum size below which a donation escapes reporting; small donations are reported too.)
Where this fits in setting up your business
These two registrations are the tax spine of a non-profit, and they sit on top of the entity you set up first. If you incorporated the charity as a Section 8 company, 12AB and 80G are the natural next step after that registration is granted. The incorporation itself runs through the SPICe+ process, and every one of these income-tax and MCA filings is signed with a Digital Signature Certificate, so getting the DSCs in place early keeps the whole chain moving. All of it sits under our pillar guide on starting a business — and a non-profit — in India.
How we handle it at RDA, Baner
At RDA Advisory in Baner, Pune, we take non-profits through the full arc — incorporating the trust, society or Section 8 company, then securing 12AB and 80G together on Form 10A, and converting to regular registration on Form 10AB inside the six-month window before it lapses. We build the 85%-application discipline into your accounts from day one so the exemption is never at risk, keep a renewal calendar so a five-year (or ten-year) expiry never surprises you, and — the part most NGOs miss — we file your Form 10BD and issue Form 10BE certificates every 31 May so your donors can actually claim what your 80G promises them. If your registration is provisional, or lapsing, or you have never filed 10BD, that is exactly the conversation to have now. You will find us at Office No. 102, Snehraj Apartment, Baner, Pune 411045, on +91 77570 45059.
Book a consult at rdatax.in
Setting up an NGO, or sitting on a provisional 12A/80G that needs to become regular before it expires? We will get your 12AB and 80G in order, build the compliance calendar, and make sure your donation reporting is done so your donors keep their deduction. Book a consultation at rdatax.in or call the Baner office.
Verification note: this guide reflects the registration regime for charitable trusts, societies and Section 8 companies under Sections 11, 12, 12A/12AB and 80G of the Income-tax Act, 1961, as restructured by the Finance Act, 2020 (effective from 2021) — provisional registration on Form 10A valid for three years, regular registration and renewal on Form 10AB valid for five years (extended to ten years, for applications made after 31 March 2025, for institutions with total income up to ₹5 crore in each of the two preceding years), the six-months-before-expiry filing rule, the 85% application requirement, the 80G donor deduction (generally 50%, subject to the 10% qualifying limit and the ₹2,000 cash restriction), and the annual donation reporting in Form 10BD with Form 10BE certificates due by 31 May. Thresholds, rates, forms and timelines are periodically revised by the Finance Act and CBDT notifications, so confirm the current position for your organisation with your CA before filing.
