Registration U/s 80G of the Income Tax Act, 1961
Section 80G of the Income Tax Act,1961 permits donors to Societies Registered U/s 80G benefits of income tax exemption on their donation. This is one of the incentive provided for the people to donate for a noble cause.As such, all NGO should try and obtain registration under section 80G. This is one way in which the NGO can express their gratitude to the donors.
What is Section 80G
Section 80G of the Income Tax Act enables an Income Tax Payee to claim deduction for donation made by them to certain organisation. This deduction is subject to certain conditions.
The amount of deduction depends on-
a). To whom the donation has been made.
b). The amount of donation. They are exempted from 100% to 50% of the amount of donation.
ARE ALL DONATIONS ELIGIBLE U/S 80G:
No. All donations are not eligible for deduction of U/s 80G. Only those donations qualify which is made to certain funds, charitable institutions registered or mentioned under U/S 80G.
WHAT ARE THOSE INSTITUTIONS:
a). Several Institutions of National importance such as-
National Defence Fund.
Prime Minister’s National Relief Fund.
Prime Minister’s Drought Relief Fund etc.
Are expressly mentioned in the Section 80G. Any donation to them quality for deduction U/s 80G by the Donor.
b). The Chief Commissioner of Income Tax can approve institutions under this section. Earlier Religious Institutions were expressly not allowed to be registered U/s 80G. However, those organisation whose expense were not related to religious activities were allowed. Currently, those religious organisations which spent an amount not exceeding 5% of its gross income towards religious activities, are also eligible to be registered.
WHY SHOULD I GET REGISTERED?
You should get yourself registered, as it will help your donor to get some relief and they can be motivated for donations.
CAN WE BE REGISTERED:
All institutions are eligible for registration provided they fulfill the following conditions:-
- The Institutions should not spend any income or assets for any purpose other than a charitable purpose.
- The Institution should not be for the benefit of any particular religion, community, or caste.
- The Institution should maintain regular accounts.
- The Institution should be registered under the Societies Registration Act or any other similar welfare Act.
- Their expenses on religious activity should not exceed 5% of total income.
- They should submit their income tax return regularly.
HOW TO GET REGISTERED:
To get your society registered U/s 80G, You have to apply in form no. 10G.
- Form No. 10G requires the following important information:-
- Name and Address of the Institution.
- Name and Address of the office bearers.
- Income tax Particulars.
- Amount of surplus and mode of their investments.
This application should be accomplished with the following documents:-
- Copy of the registration granted U/s 12A or copy of notification issued U/s 10(23) or 12(23C) if any.
- A note on the activities of the institution for the last three years.
- Copy of the audited accounts for the Past three years.
- Memorandum and Rules & Regulations.
- Copy of the registration Certificate of the society.
What happens after submission of your application
It is normally practice that after submission of the above form with the Commissioner of Income Tax, the form is sent by him to your Assessing Officer. He in terms depute an Inspector to visit your place to inspect your books of accounts and other relevant details. Based on such an inspection, a report is sent to the Commissioner by the Assessing Officer. This report is the most important element in the entire process. After submission of such inspection report, an order is received from the Commissioner granting the registration U/s 80G. In case, the Income Tax Authority decides not to allow registration of your Society a notice will be sent indicating the intention of the department and on receipt of which you can submit your comments or objections.
This registration is normally allowed for a period of two to three years. It has been further provided that commissioner will make his decisions within six months of the submission of application.
OBLIGATION AFTER REGISTRATION:
Once your society is registered, there are certain obligations, which is required to be followed.This registration enables donors of your society, a deduction on the amount donated by them to your society. To enable them to claim such exemption, the receipt issued by you should contain reference of approval commissioner order U/s 80G and preferably a copy of such approval should be given to the donors. The society should also submit its regular Income Tax Return in time even though, it is NIL.
RENEWAL OF APPROVAL
As mentioned earlier approval U/S 80G is allowed for a specific period of time. Hence, it is essential that you submit a fresh application requesting for renewal of such approval. Such renewal application should be made at least six months before the expiry of the current approval. This will ensure that there is no disruption in the availability of exemption.
OBLIGATION OR CAUTION BY DONORS:
In case, a donor is giving donation to a society which claim that it is registered U/s 80G, the donors should ensure that:
- He gets a proper receipt for his donation.
- Such receipt indicates that this society is registered U/s 80G and reference number of approval with date of expiry is mentioned on the receipt.
- He should try to obtain a copy of the approval from the society.
In case, these documents are not submitted by him along with the Income Tax Return, his claim of deduction may not be entertained by the Income Tax Department.
For the donor of the society Section 80G provides some relief by reducing their tax liability. wherever, society is entitled to registration U/s 80G, they should obtain such registration and intimate the same to the donors.