Section 12AB

Every NPO wanting tax-exempt status in India today registers under one section: Section 12AB of the Income Tax Act, 1961.

The workbook is direct about this: "All NPOs must be registered under Section 12AB of the Income Tax Act and file income tax returns." Only once an NPO's returns are assessed does it actually get tax-exempt status for that year.

Section 12AB replaced the older Section 12AA registration route, following the Income Tax (6th Amendment) Rules, 2021. Every institution earlier registered under 12AA, and every new entity, had to apply afresh under 12AB — though the underlying registration procedure stayed broadly the same.

Registration under 12AB unlocks more than Section 11's own exemption. It is also the gateway an NPO needs before it can extend an 80G deduction to its own donors, and before it can satisfy the SSE's own income-tax-registration eligibility criterion.

Section 12AB registration runs in two stages, per the workbook (Chapter 10, section 10.3):

Once registered, an NPO takes on ongoing compliance duties:

1. Maintain proper books of accounts and prescribed documents
2. File its income tax return on time, with accounts audited by a Chartered Accountant
3. Follow the specific conditions its registration was granted subject to
4. Furnish required details under Rule 18AB of the Income Tax Rules, every financial year
5. Issue a certificate to each donor in Form 10BE

For SSE registration purposes, Table 3.1 requires this certificate to be valid for at least the next 12 months from the date the NPO applies to the exchange — one of several mandatory criteria alongside minimum age (3 years) and minimum annual spending/funding thresholds.

Illustrative NPO; the durations and compliance duties are the workbook's own.

Vidya Deep Trust applies for tax registration and is granted provisional registration under Section 12AB, valid for 3 years. Over that period, it keeps proper books, files returns on time with audited accounts, furnishes Rule 18AB details annually, and issues Form 10BE certificates to every donor who wants an 80G deduction.

Before the 3 years expire, it re-applies and receives subsequent registration for 5 years. When Vidya Deep Trust later applies to register on an SSE, it presents this 12AB certificate — still valid for well over 12 months — as part of Table 3.1's mandatory registration criteria, alongside its 3-year age and its annual spending and funding figures.

Chapter 10 (Taxation), section 10.3, states that all NPOs must register under Section 12AB, describes the provisional (3-year) and subsequent (5-year) registration stages, and lists the five post-registration compliance duties. Chapter 3's Table 3.1 makes a valid 12AB (or 12A/12AA) certificate an SSE registration requirement. Expect a question on the duration of provisional versus subsequent 12AB registration, or the five post-registration compliance duties.

• Provisional = maximum 3 years; subsequent (regular) = 5 years — do not swap these two durations.
• 12AB is the current registration route, replacing 12AA from the 2021 amendment rules.
• The workbook numbers registration two ways across chapters: Chapter 2 says NPOs must be registered under Section 12A; Chapter 10 says Section 12AB; Chapter 3's own eligibility condition names 12A/12AA/12AB together. Learn all three labels.
• Do not confuse 12AB registration itself with Section 11, the provision that grants the income exemption once 12AB registration is in place, or with Section 80G, the separate approval needed before an NPO can extend a deduction to its donors.