Section 12A of ITA, 1961 : Section 12A: Conditions For Applicability Of Sections 11 And 12

Explanation using Example

Imagine a non-profit organization, "Green World Foundation," which was established on January 1, 2021. They focus on environmental conservation and wish to benefit from certain tax exemptions available to trusts and institutions under sections 11 and 12 of the Income-tax Act, 1961.

To avail these benefits, the Foundation must register with the Income Tax Department. They file an application for registration on December 1, 2021, well within one year of their establishment, as required by section 12A(1)(a). The Principal Commissioner reviews their application and grants them registration under section 12AA.

For the financial year 2021-2022, Green World Foundation's income exceeds the maximum amount not chargeable to income tax. Therefore, they have their accounts audited by a certified accountant as per section 12A(1)(b) and submit the audit report along with their income tax return before the due date specified under section 139(4A).

By fulfilling these conditions, the Foundation ensures that their income from donations and other activities used for environmental conservation is not subject to tax under the Income-tax Act, allowing them to utilize more resources towards their cause.