Doing charity is a noble task. Not just the God but the Income Tax Department acknowledges this fact. Therefore, you get more than just good karma for donating your income to charitable institutions. Section 80G of the Income Tax Act offers a tax deduction on contributions made to certain charitable institutions prescribed under the Income Tax Act, 1961. Section 80G registration of the Income Tax Act primarily deals with donations made towards charity while Section 80G(5) registration deals with the limitations on tax exemption on donations made under Section 80G.
Registration under section 80G(5) of the Income Tax Act provides benefits to NGOs. If NGO has 80G(5) certificate with them, donor gets financial benefit in his/her taxable amount of their income. If an NGO gets itself registered under section 80G(5) 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(5) Certificate, NGO can attract more donors.
If an NGO gets itself registered under section 80G(5) then the person or organisation making a donation to the NGO will get a deduction of 50% from his / its taxable income.
New Compliances introduced in Budget 2020 for Section 12A and 80G
According to the new Compliance with regards to section 12A and section 12AA, All NGOs presently having exemption u/s 12AA of the IT Act shall have to reapply for the same by Dec 31, 2020. and shall have to obtain new registration u/s 12AB.
Latest Update
The new compliances under the mentioned Sections i.e under Section 10(23C), 12AB, 35(1)(ii)/(iia)/(iii) and 80G of the Income Tax were to be completed till 31st August, 2020 which was extended till 31st December 2020. Then again the same scheme was extended to 01.04.2021 and 30th June 2021 and 31st August respectively.
Now looking in to the current situation the CBDT has again extended the due date for the application under Section 10(23C), 12AB, 35(1)(ii)/(iia)/(iii) and 80G of the Act in Form No. 10A/ Form No.10AB, for registration/ provisional registration/ intimation/ approval/ provisional approval of Trusts/ Institutions/ Research Associations etc. has been extended till 31st March, 2022 and hence now all existing trust have to re-register themselves on or before 31.03.2022.
Difference between Section 12AA and newly introduced Section 12AB
Section 12 AA
|
Section 12AB
|
What NGOs are required to do?
|
The benefits of section 80G was available to all the NGOs registered under Section 12AA for the exemptions in the donations recieved by the NGOs. These benefits were available on a continuous basis.
|
Already registered NGOs u/s 12AA will have to reapply for the same and shall have to obtain new registration u/s 12AB
|
The NGOs are required to reapply before 31st Decmeber, 2020 and get new registration u/s 12AA
|
Exemptions are valid for Lifetime
|
Already exempted NGOs will have a 5 year validity. While the new registrations will be provided with 3 years provisional registration
|
NGOs shall have to provide evidence to and convince Income Tax authorities of the bonafides of their activities every 5 years (3 years in case of New registrations), in order to retain their tax exemption
|
Details required only for overseas contributions/ donations
|
Donor-wise details to be maintained and all donors will have to be given a certificate
|
NGOs will have to maintain Administrative records.
|
80G benefits available to donors for exempt NGOs on a stable basis
|
80G donations now exposed to uncertainty.
|
–
|
Condition for registration under section 80G(5) online / How to get approval u/s 80G(5) for Charitable Trust / Society / NGO:
For approval under section 80G(5) the following conditions mentioned in Section 80G(5) vi 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 purposes.
- The NGO shall not work for the benefit of particular religious community or caste.
- The NGO shall maintain regular accounts of its receipts & expenditures.
- Donor-wise details to be maintained and all donors will have to be given a certificate.
- Tax deductions under section 80G will not be available to donors who opt for reduced rate of tax.
EbizFiling.com is an eminent business platform and a progressive concept, which helps end-to-end incorporation, compliance, advisory, and management consultancy services to clients in India and abroad. Registering Non-profit Organisation under section 80G(5) is easy, seamless, cheapest and quickest with EbizFiling.com! Apart from this ebizfiling.com also helps in registration of trust / NGO / NPO under Section 12A. You may get in touch with our compliance manager on 09643203209 or email info@ebizfiling.com for free consultation.
A Compliance Manager will get in touch with you to obtain your documents along with a simple checklist. You need to fill up that checklist and submit along with your documents for processing for Income Tax Section 80G 5 registration application. Our team of experts will verify the documents provided by you and take the procedure further.
Once we applied for the registration u/s 80G(5), after satisfying the Commissioner about the objects or the trust of institution, he will pass an order in writing registering the trust or institution of Non Profit Organization / Non Governmental Organization. Note that if he is dissatisfied, he may refuse to register the trust / NGO / NPO after hearing the applicant.
