MSME, startups and registrations · Startups, trusts and NGOs
How does a trust, society or Section 8 company get registration for tax exemption and 80G approval (now section 354)?
Short answer
A charitable trust, society or Section 8 company is tax-exempt only after registration under the old section 12A or 12AB (now section 332). A new one first gets provisional registration for three years. Approval under section 80G (now section 354) lets donors claim a deduction (now section 133). It must apply 85% of its income to its objects, get its accounts audited, and file ITR-7 and donation statements.
Choosing the form
| Trust | Society | Section 8 company | |
|---|---|---|---|
| Law | Indian Trusts Act or state law (for public trusts) | Societies Registration Act, as adopted by the state | Companies Act, 2013 |
| Formed by | Trust deed, registered with the sub-registrar | Memorandum and rules, registered with the Registrar of Societies | Licence from the Registrar of Companies, through SPICe+ |
| Members | Trustees | At least 7 members | At least 2 (private) |
| Governance | Trust deed | Governing body | Board of directors; Companies Act compliance |
| Credibility with donors and CSR | Good | Good | Often preferred |
Registration under any of these laws does not by itself give tax exemption.
Income-tax registration
| Stage | Form | Validity |
|---|---|---|
| Provisional registration, for a new organisation | Form 10A | 3 years |
| Regular registration | Form 10AB, at least 6 months before the provisional one expires, or within 6 months of starting activities, whichever is earlier | 5 years; 10 years for organisations with total income up to ₹5 crore in each of the two preceding years |
| 80G approval for donors (section 80G, now section 354) | Same forms, same periods | Same |
Under the 2025 Act these organisations are called registered non-profit organisations, and the rules are in the chapter from section 332.
Conditions to keep the exemption
- Apply at least 85% of income to its objects in India during the year. Up to 15% can be set aside freely; more can be accumulated for up to 5 years for a stated purpose, with the form filed in time.
- Business activity is allowed only within limits, especially for organisations working for the advancement of general public utility.
- No benefit to trustees, founders or their relatives.
- Donations: anonymous donations above the limits are taxed at 30%.
Annual compliance
- Audit report by a Chartered Accountant, filed one month before the return due date.
- ITR-7 by 31 October.
- Statement of donations received by 31 May, and donation certificates to donors, so that they can claim the deduction under section 80G (now section 133).
- FCRA registration before receiving any foreign contribution.
- CSR-1 registration with MCA to receive CSR funds from companies.
Legal basis
- Sections 11, 12A, 12AB and 80G, Income-tax Act, 1961, now the provisions on registered non-profit organisations (from section 332) and section 133, Income-tax Act, 2025
- Section 8, Companies Act, 2013
Official sources
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