The Income Tax Act 1961 provides deduction while computing the total income in the hands of donor under section 80G. It provides deduction in respect of donations to certain funds, charitable institutions, etc.
The donee gives a receipt of donation, based on which the donor is entitled to claim a deduction, provided the donee institution is approved under section 80G of the Income Tax Act 1961. The provisional 80G registration will be valid for 3 years.
The Income Tax Department issues an 80G Certificate to Section 8 Company or Charitable Trust or institutions or a Non-Profit organisation or a Non-Government Organisation. The donor is entitled for the tax exemption on 50% of his donation because donations will be deducted from his gross total income. To qualify for the tax exemption, the donor must obtain the stamped receipt from the NGO of such donation. The receipt must include the NGO name, PAN, 80G Unique registration number, date of formation.
One of the key feature of new registration process is that provisional registration will be provided for a period of three years without detailed enquiry by the prescribed income-tax authority even in cases where activities of the entity are yet to begin.
Benefits of 80G Registration
As explained above, the main source of Income for NGO is donation received from society and donor is willing to donate to that NGO which gives him tax benefit. There are many benefits of Section 80G Registration:
- As the Donor is getting Tax benefit, more peoples are willing to donate to registered NGO.
- If NGO want CSR Grants from Corporates, then they have to register themselves with MCA by filing Form CSR-1. And one of the conditions for Form CSR-1 registration is that the NGO must be registered u/s 12A and 80G of Income Tax Act. If NGO is registered under both sections, then they can approach corporates for getting CSR Funding after filing Form CSR-1
- If NGO wants foreign donation, then FCRA Registration is mandatory. Section 80G Registration helps in FCRA Registration also.
- Helps in getting donation from big NGOs.
Compliances after registration under section 80G
- The NGO shall maintain its accounts regularly and also get them audited as per the provisions of section 80G(5)(iv) read with section 12A(1)(b)/10(23C) of the Income Tax Act 1961.
- The NGO must report on annual basis to Income Tax Department, the details of donors in Form No – 10BD.
- As per the provisions of rule 18AB, The NGO must issue Certificate of donation to the donor in form no 10BE after filing of Form No – 10BD.
- The NGO must file its Income Tax returns on or before the prescribed due date.
Note: Non-compliance of above requirements invites monetary penalty and in case of non-compliance on regular basis, it may liable to cancellation of Section 80G Registration.
Documents required for Filing Form 10A
- self-certified copy of the instrument/document evidencing the creation, or registration or establishment of the applicant like Trust Deed or Registration certificate provided by Registrar of Firms and Societies or Registrar of Companies.
- self-certified copy of existing order granting registration under section 80G, as the case may be;
- where the applicant has been in existence during any year or years prior to the financial year in which the application for registration is made, self-certified copies of the annual accounts of the trust or institution relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up.
- Where any application under section 80G has been rejected in past, self-certified copy of the order rejecting the application passed by the Income Tax Authorities.
- Details of Author / Founder / Settlor / Trustees / Member of Societies like PAN or Aadhar or Passport or Driving License or Ration Card.
- If applicant is registered on Darpan Portal, Self-certified copy of certificate of registration.
- If applicant is registered under Foreign Contribution (Regulation) Act, self-certified copy of registration certificate.
Process of Registration:
Step 1: Applicant (Trust, society or other Institutions) shall apply for registration over Income Tax Portal using their Income Tax Login credentials in Form No. 10A (or 10AB as the case) may be. Applicant shall submit other documents as listed above in this article.
Step 2: On receipt of an application in Form No. 10A (or 10AB as the case may be), the Principal Commissioner or Commissioner, authorised by the Board:
- In case of applicant who is already registered u/s 80G or in case of Provisional Registration where Form 10A has been submitted – shall pass an order in writing granting registration in Form No.10AC and issue a 16 digit alphanumeric Unique Registration Number (URN) to the applicants (Provisional registration shall be effective from the assessment year beginning on 1st day of April, 2022.)
- In other cases i.e. where Form 10AB has been submitted – the order of registration or rejection or cancellation of registration shall be in Form No.10AD and in case if the registration is granted, 16 alphanumeric number Unique Registration Number (URN) shall be issued.