What is 80G?
When an NGO registers, it gets tax benefits, but donors do not. To encourage donations, the Income Tax Act provides tax benefits to donors under Section 80G. This section allows donors to claim deductions on their taxable income for donations made to eligible organizations. The main goal of 80G is to support organizations involved in social or cultural development activities.
Who can apply for it?
- Below mentioned entities must register under section 80G.
- Non-Governmental Organizations (NGOs)
- Charitable trusts or groups
- Section 8 companies
- Charitable or religious institutions with no-profit purpose
What are the benefits of 80G?
- Tax Benefits for Donors: If a trust or organization has an 80G certificate, donors can claim tax deductions on their taxable income for the donations they make.
- Improved Credibility: Having an 80G certificate increases an organization’s credibility and goodwill, attracting more donors who trust the NGO’s work.
- More Donors: Since 80G offers tax benefits, it encourages more people and businesses to donate, knowing they can claim deductions on their taxable income.
- Transparency and Accountability: To maintain 80G registration, organizations must follow transparency and reporting standards. This builds donor trust and ensures accountability.
- Easier Access to Government Funds: NGOs with an 80G certificate are more likely to receive government grants and funding, as it proves their credibility and eligibility.
- Stronger Reputation: With government support and increased donations, an NGO gains a better reputation among the public, making it easier to attract more support.
Key difference between 12A and 80G
Below table highlights the difference between Section 12A and 80G:
| Basis | Section 12A | Section 80G |
| Purpose | Provides tax exemption to NGOs and chari-table organizations. | Offers tax deductions to donors |
| Beneficiaries | Helps the NGOs save on income tax. | Helps donors reduce their taxable income. |
| Eligibility | Applicable to NGOs, charitable trusts, and Section 8 companies engaged in non-profit activities. | Applicable to donors to registered charitable organizations. |
| Tax Benefit | The organization is exempted from paying income tax. | Donors can claim deductions on their taxable income for donations made. |
| Encourages | Supports NGOs to retain more funds for charitable activities. | Encourages more donations by offering tax benefits to donors. |
Conclusion
Section 12A and 80G are essential for charitable organizations to receive tax benefits and attract more donors. 12A registration helps organizations save on income tax, while 80G registration encourages donations by offering tax deductions to donors. Understanding the difference between 12A and 80G is important for non-profits looking to maximize their financial resources. Proper registration under these sections ensures long-term sustainability and growth for charitable organizations.
Suggested Read :
How to Download 12A and 80G Certificate?
Section 12AB and 80G Registration
Renew a Trust License in India
Exemptions under Section 80G and 12A / 12AA
Documents Required for Section 12A and 80G Registration
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