80G Registration

Introduction

A NGO can avail income tax exemption by getting itself registered and complying with certain other formalities, but such registration does not provide any benefit to the persons making donations. The Income Tax Act has certain provisions, which offer tax benefits to the "donors". All NGO's should avail the advantage of these provisions to attract potential donors. Section 80G is one of such sections.

Procedure

If an NGO gets itself, registered under section 80G then the person or the organisation making a donation to the NGO will get a deduction of 50% from his/its taxable income. The NGO has to apply in Form No. 10G to the Commissioner of Income Tax for such registration.

Earlier registration under 80G was given as one time registration unless any specific restrictions are provided in the registration certificate itself but finance act 2020 has made some substantial changes in registration process and period for which approval will be given.

New Registrations

Any new application for registration made on or after 1st October 2020 (as amended by Finance Act, 2020) shall be approved only for a period of 3 years and thereafter approval for 80G needs to be reapplied at least 6 months prior to the validity period. The subsequent approval shall be valid for five years.

Existing Registration- Validation & Re approvals

Presently the approval u/s 80G is valid for perpetuity. The Finance Bill 2020 provides that all the existing 80G approvals needs to be revalidated and the application for the same should be submitted within three months from the date on which the proposed amendment come into force(i.e. 1st October 2020). The re approvals will be valid for a period of 5 years and thereafter approval for 80G has to be again applied for at least 6 months prior to the validity period.

Documents required to be filled with form 10G

The application form should be sent in triplicate to the Commissioner of Income Tax alongwith the following documents :

  • copy of income tax registration certificate.
  • details of activities since its inception or last three years whichever is less
  • copies of audited accounts of the institution/NGO since its inception or last 3 years whichever is less.

Conditions to be fulfilled under Section 80G

For approval under Section 80G the following conditions are to be fulfilled :

  • the NGO should not have any income which are not exempted, such as business income. If, the NGO has business income then it should maintain separate books of accounts and should not divert donations received for the purpose of such business.
  • the bylaws or objectives of the NGOs should not contain any provision for spending the income or assets of the NGO for purposes other than charitable.
  • the NGO is not working for the benefit of particular religious community or caste.
  • the NGO maintains regular accounts of its receipts & expenditures.
  • the NGO is properly registered under the Societies Registration Act 1860 or under any law corresponding to that act or is registered under section 8 of the Companies Act 2013.

Issuance of Certificate

On receipt of the application, the Commissioner may pass a written order which would effectively register the trust/institution under Section 80G of the Income-tax Act. The Commissioner is also entitled to demand further documents from the applicant if the need for the same is felt, or reject the application. The registration accorded to the trust will be valid as per the new provisions of act amended through Finance Act 2020.

Extent of benefit

There is ceiling limit up to which the benefit is allowable to the donor. If the amount of deduction to a charitable organisation or trust is more than 10% of the Gross Total Income computed under the Act (as reduced by income on which income-tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), then the amount in excess of 10% of Gross Total Income shall not qualify for deduction under section 80G.

In other words, while computing the total income of an assessee and for arriving at the deductible amount under section 80G, first the aggregate of the sums donated has to be found out. Then 50 per cent of such donations has to be found out and it should be limited to 10 per cent of the gross total income. If such amount is more than 10 per cent of the gross total income, the excess will have to be ignored.

Cash payment upto Rs. 2,000/-

Any donation in excess of Rs. 2,000/- under section 80G should be made any mode other than cash.

Penal provisions

Donee, the assesse is required to furnish certificate of amount received to every donor and also required to file statement of donation received to Income tax department.

On non compliance of above assesse will become assesse in default and liable to penalty u/s 271K and the quantum of penalty will be

  • Minimum: Rs 10,000
  • Maximum: Rs 1,00,000
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