Registration u/s 12a

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 April 2014 A Society is registered with the objective of imparting education to the children and opened a school, and also the society has arranged land from one of its member.

Now my question is that whether this society can apply for the grant of certificate under section 12A ?

Plz reply soon

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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25 April 2014 yes as it will be getting fitted in defination oof charitable activities u/s2.

Querist : Anonymous

Querist : Anonymous (Querist)

26 April 2014 if the society is running by the members who have given the land on lease to the society to run the school. AND
these members are also getting salary from the society

whether still it can be registered under section 12A ?

Querist : Anonymous

Querist : Anonymous (Querist)

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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20 July 2025 Great question!

About registration under Section 12A (Income Tax Act):
Section 12A registration is granted to charitable or religious trusts/societies, allowing them tax exemption on their income.
Your society running a school for charitable purpose (imparting education) qualifies as a charitable activity under Section 2(15) of the IT Act, so it can apply for 12A registration.
But regarding the concern:
Members giving land on lease and also drawing salary from the society
This raises some flags:

For 12A registration, the society/trust must operate without profit motive.
Salaries paid to members are allowed only if they are reasonable and for bona fide services rendered.
The lease of land from members is generally permitted, but the rent should be at market rates, and the transaction must be arms-length (not excessive or in violation of trust laws).
If members are controlling the society and extracting unreasonable benefits (like excessive salary or lease rent), the Income Tax Department may deny 12A registration or revoke it later.
In short:
Yes, you can apply for 12A.
But ensure transparency and reasonability in payments (salary and lease rent).
Keep proper documentation, market valuation of rent, and maintain non-profit principles.

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