How to get a Tax Exemption Certificate for Trust

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How to get a Tax Exemption Certificate for Trust

Preface: This post was originally published in 2019 and has been updated on June 27, 2025, to provide you with the most current and accurate information.

A trust is a non-for-profit entity in India. Therefore, it may be eligible for tax exemption if it conducts charitable activities permitted under Income Tax Act 1961. However, a trust does not automatically get tax exemption simply because of its structure. It needs to secure a tax exemption certificate first. Only then does it receive the ‘tax exempt’ status. 

If you recently incorporated a trust and want to secure a tax exemption certificate, check out this blog post where we explain all the required steps for getting a tax exemption certificate in India.

What is Tax Exemption Certificate?

Tax Exemption Certificate, officially known as 12A Certificate, is a legal document granted by the Income Tax Department (ITD) to trusts and other non-profit organizations. The purpose of this certificate is to exempt a non-profit entity from payment of tax on income.

Generally, the trusts apply for 12A registration soon after incorporation. Upon obtaining this registration, they enjoy exemption from income tax’s payment on surplus income. 

Advantages of Exemption Certificate

Securing a certificate for tax exemption is extremely beneficial for trusts and other non-profit entities. Here are the key advantages of this certificate:

• Securing a certificate of exemption allows trusts to get tax-free income.

• 12A certificate registration is a one-time registration process. Therefore, a trust does not need to renew it from time to time. It can claim the certificate’s benefits as and when needed.

• Benefits on earning or saving money are available only to those who are registered under Section 12A and possess tax exemption certification. However, the amount of income allocated to charitable or other non-commercial objectives should not go beyond 15% of the total income.

• The trusts that have registered under the 12A provision are eligible to receive grants from national and international organizations.

• Having a valid tax-exemption certification directly points towards the authenticity of a trust. Therefore, trusts with the 12-A certificate are seen as more credible and legitimate by donors.

Eligibility Criteria for Tax Exemption Certificate

Before you apply for 12A certificate for your trust, make sure you meet the following eligibility requirements set forth by the ITD.:

• The trust shall meet the “charitable purpose” definition as outlined under Income Tax Act. The purpose includes relief to the poor, medical aid, education and environmental preservation activities.

• The trust shall not have any profit-making motive. 

• The trust should not be a private or a family trust. 

• A trust with goals related to public utility is eligible.

• In case the trust engages in trade/commerce, registration under Section 12A is granted only if trade receipts are less than 20 percent of total receipts.

• The trust’s activities must genuinely benefit the public and not just on papers.

Documents Required For Exemption Certification

To secure a tax exemption certificate, you require the following set of documents during the registration process.:

• Copy of Trust Registration Certificate 

• Know Your Customer (KYC) Details of Members of Trust

• Permanent Account Number (PAN) Card Details of Trust

• Copy of Registered Office’s Utility Bill (i.e., water or electricity bill)

• Rent Agreement Bill (in case of rented premises)

• No Objection Certificate (NOC) from Landlord (in case of rented premises)

• Details of Activities conducted by Trust

• Annual Financial Account Details

• Proofs to support charitable activities taken up by Trust

• Supporting documents for the Trust’s establishment

• Any other documents requested by ITD

Process for Securing Exemption Certificate

To secure a 12A certificate for tax exempt status, the following steps need to be fulfilled.: 

Step 1: Visit the official portal of the Income Tax Department.

Step 2: Log into the portal using your credentials.

Step 3: When you have logged in successfully, go to the menu bar visible on the homepage. Then, click on e-File > Income Tax forms > File Income Tax Forms.

Step 4: Now, go to the tab “Persons not dependent on any source of income/Source of income not relevant”. Now, select ‘Form 10A’.

Step 5: Thereafter, you choose the Assessment Year (AY) with the help of the drop-down menu.

Step 6: Now, select the ‘Prepare and Submit’ option.

Step 7: Add in all the necessary details in Form 10A. Also, attach all the relevant attachments.

Step 8: Once your form is complete, review it carefully to make sure you filled in all the details correctly and attached clear and easily readable attachments.

Step 9: Finally, verify and submit the form with the help of a Digital Signature Certificate (DSC). Alternatively, you can use Electronic Verification Code (EVC). 

After fulfilling the aforementioned steps, the Income Tax Department will assess your application. If satisfied with the application details as well as documentation, the Department will grant your trust an exemption certification

Conclusion

If you want your trust to be exempted from paying income tax, it is necessary for you to get a 12A registration certificate. To get this certificate, you must file an online application via the e-filing portal of the Income Tax Department. In case you haven’t registered a trust yet, don’t worry. We’re here to assist you in your trust registration journey! We can also help you fulfill the necessary post-registration compliance requirements upon successful registration of your trust. 

Frequently Asked Questions (FAQs)

Q1. Can a trust apply for 12A registration?

A. Yes, since a trust is a not-for-profit entity, it can apply for 12A registration. However, the trust’s activities must align with the definition of charitable purposes as provided under IT Act 1961.

Q2. Can a section 8 company apply for 12A registration?

A. Yes, a section 8 company can apply for 12A registration for being granted the ‘tax exempt’ status by the Tax Department. Make sure the trust fulfills all the eligibility requirements before applying for the registration.

Q3. Can a society apply for 12A registration?

A. Yes, a society is a non-profit organization. Therefore, it can apply for 12A registration. However, the society must fulfill the eligibility requirements set forth by the Tax Department.

Q4. Is it mandatory for a non-profit entity to secure 12A certification for becoming exempt from payment of income tax?

A. Yes, securing 12A certification is mandatory for a non-profit entity to become exempt from payment of income tax.

Q5. Is a private trust eligible for tax benefits under Section 12A of IT Act 1961?

A. No, a private trust is not eligible to receive tax benefits under Section 12A of the IT Act 1961.

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