Importance of 12a and 80g for charitable organization registration

Registration of charitable organization under section 12a and 80g of income tax act is a milestone step which can boost the credibility of the organization to a considerable extent, reduce operational complexities and strengthen its financial viability. The section 12a is a formal recognition given to charitable organizations that have to operate in the form of tax-exempt charities. Besides creating a legal confirmation as to the nature of the organization being a charitable organization, this registration will also simplify fundraising since it will assure the donors that an organization is legitimate. The organization will be exempted of paying income tax on the donation they will give once an organization has been registered under section 12a and thus through this, more individuals, corporations and other organizations will respond to the call of the donation by giving more. These advantages play a crucial role in increasing the reach and influence of the organization since it will be able to divert more resources to its charity work instead of paying tax. 

In the same breath and manner, Section 80g registration is very vital in tax deduction of donations. The donors who are required to donate to organizations which have obtained section 80g status can deduct the donations against their taxable income and thus avail high savings on their taxes. This presents a strong financial motivation of donors to give, hence raising the amount of cash being received in the organization. The existence of 80g benefits also supports the transparency and accountability of the organization because first the organization has to follow set norms and provide regular reports of compliance to continue to remain in the search. This instils trust and faith on donors, beneficiaries and regulatory bodies. 

Moreover the two registrations together boost the image of a charities organization before the society as well as the government. They manifest their compliance with the legal and ethical requirements which are crucial in gaining credibility and partnerships, grants and cooperation. Besides, these registrations can help the organization attract different government mechanisms, grants and funding programs that are meant to promote social, educational, health, environmental causes. On the whole the process of registration under 12a and 80g is not a procedural formality but a tactical step supporting the growth of the organization, its sustainability and the possibility to carry out its mission efficiently. It confirms that the organization is working within the boundaries of the law and it achieves its capability to the maximum to produce social impact by rising donor trust and fiscal effectiveness.