Micro Finance institutions and Non-Banking Financial Companies (NBFCs) can significantly benefit from obtaining 12AA and 80G registrations under the Income Tax Act, 1961.
The Import Export Code (IEC) is a 10-digit registration number issued by the Directorate General of Foreign Trade (DGFT), Ministry of Commerce, Government of India. It is mandatory for businesses and individuals involved in the import or export of goods and services from India. The code serves as a unique identification for tracking international trade transactions and is essential for customs clearance.
Registration under sections 12AA and 80G provides legal recognition to Micro Finance and NBFCs as charitable organizations committed to social welfare.
The IEC is recognized by all government agencies and authorities involved in foreign trade. It serves as a unique identification number for importers and exporters in India.
Tax-exempt status enhances community engagement efforts by fostering trust and participation among local stakeholders.
With enhanced financial stability and donor support, registered Micro Finance and NBFCs can implement rigorous impact assessment and evaluation mechanisms.
Micro Finance institutions and Non-Banking Financial Companies (NBFCs) can enhance credibility and trust by obtaining 12AA and 80G registrations under the Income Tax Act, 1961. Here’s how these registrations foster trust:
Transparency and Accountability: Registration under section 12AA requires Micro Finance and NBFCs to adhere to rigorous regulatory standards and maintain transparent financial practices. This commitment to accountability instills trust among stakeholders, including donors, beneficiaries, and regulatory authorities.
Tax Exemption Benefits: 12AA registration grants tax exemption on income generated from charitable activities, while 80G certification enables donors to claim tax deductions on contributions made to registered organizations. These tax benefits encourage financial support from individuals and corporate entities, facilitating sustainable funding for social impact initiatives.
Enhanced Donor Confidence: Donors are more inclined to support organizations with 12AA and 80G registrations due to the assurance of compliance with legal and ethical standards. The credibility associated with these registrations reinforces donor confidence, leading to increased contributions towards community development and poverty alleviation programs.
Obtaining 12AA and 80G registrations under the Income Tax Act, 1961, is essential for Micro Finance institutions and Non-Banking Financial Companies (NBFCs) to fulfill their mission effectively. Here are the key reasons highlighting their importance:
Enhanced Credibility: Registration under section 12AA establishes Micro Finance and NBFCs as recognized charitable entities committed to promoting social welfare. This legal recognition enhances organizational credibility, fostering trust among donors, beneficiaries, and stakeholders.
Access to Funding: 12AA registration grants tax exemption on income derived from charitable activities, while 80G certification enables donors to claim tax deductions on contributions made to registered organizations. These tax benefits attract financial support from individual and corporate donors, facilitating sustainable funding for poverty alleviation and community development initiatives.
Financial Sustainability: Tax exemptions under 12AA and 80G registrations allow Micro Finance and NBFCs to allocate resources efficiently towards program implementation and capacity-building efforts. This financial sustainability enables organizations to expand outreach, improve service delivery, and achieve greater impact in underserved communities.
