| Income Tax : Deduction
U/s 80 G of Income Tax Act 1961
Purpose
Registration under section 80G of Income Tax Act provides benefit
to NGOs. If NGO has 80G certificate with them, donor gets financial
benefit in his/her taxable amount of their income. If an NGO gets
itself registered under section 80G then the person or the organization
making a donation to the NGO will get a deduction of 50% from his/its
taxable income. By availing 80G Certificate, NGO can attract more
donors.
Steps for registration u/s 80G are given below
1. The NGO should apply in Form No. 10G (given below) to the Commissioner
of Income Tax in your district. The application form should be submitted
with triplicate.
Period for which approval is given: - Normally this approval is
granted for 2-3 years. But now, as amended Act says, 80 G Certification
is given for the lifetime, instead of short period of 2 to 3 years.
2. Following documents are required to be submitted along with
form 10G:
A. Copy of income tax registration certificate i.e. Certificate
u/s 12A.
B. Details of activities carried out by NGO in last three years
C. Copies of last 3 years’ audited statements of the NGO
3. In order to get approval u/s 80G the following conditions are
to be fulfilled by NGO:
A. The NGO should not have any business income. If, the NGO has
business income then it should be maintained in separate books of
accounts and should not divert donations received for such business.
B. The bylaws or objectives of the NGOs should not contain any provision
to spend the income or assets of the NGO for purposes other than
charitable.
C. The NGO should not be working for the benefit of particular religious
community or caste.
D. The NGO should maintain regular accounts of its receipts &
expenditures.
E. The NGO should be registered under the Societies Registration
Act 1860 or under any law corresponding to that act or is registered
under section 25 of the Companies Act 1956.
NGO should take following steps after receiving donation
u/s 80G
1. Issue Receipt to donor: Recipient NGO must issue a receipt for
donation received u/s 80G. The receipt must contain the name and
address of the NGO along with Registration Number allotted by Income
Tax Department, the name of the donor, the amount donated (please
ensure that the amount written in words and figures tally with each
other).
2. Produce photocopy of 80G certificate: NGO should give Xerox
copy of 80G Certificate to donor along with the receipt of donation
if it is demanded by donor.
3. Only donations in cash/cheque are eligible for the tax deduction:
Donations in kind do not entitle for any tax benefits. For example,
during natural disasters such as floods, earthquake, and many organizations
start campaigns for collecting clothes, blankets, food etc. Such
donations will not fetch donor any tax benefits.
Benefit to donors
If aggregate of the sums donated exceed 10% of the adjusted gross
total income, the amount in excess of 10% ceases to be entitled
for tax benefit. (NGO should inform this benefit to their donors)
Form
10G (take content from the pdf file in this folder)
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