Section 80G of Income Tax Act deals with the contributions made to some relief funds and charitable institutions, such contributions can be claimed as deduction. It provides benefits to the donor of an NGO.
However, it should be noted that all donations are not eligible for deductions under section-80G. Only donations made to prescribed funds qualify as a deduction.
- Who is eligible to claim for section 80G?
- How to obtain 80G Registration?
- What are the documents required for claiming Deduction under Section-80G?
- 80G-Registration – Compliance
- Which are the donations eligible for 80G exemption?
Who is eligible to claim for Section-80G?
- Any taxpayer can claim this deduction, i.e., individuals, company, firm or any other Assessee.
- The claim of such contribution can be eligible only when the payment is made via a cheque or a draft or in cash.
- Contributions made in kind, such as food material, clothes, medicines etc. do not qualify for deduction under section 80G.
Mode of Payment
Any donations made in cash exceeding Rs 2,000 will not be allowed as deduction. Hence, the donations above Rs 2,000 should be made in any mode other than cash to qualify as a deduction under section 80G.
How to Obtain 80G Registration (80G-Certificate)?
Application on Form 10G: For obtaining registration under this section, the application shall be made in Form 10G to the Income Tax Commissioner. The application should be accompanied by the following documents:
- Registration Certificate and MOA /Trust Deed
- NOC from the proprietor of the land where the registered office is situated
- Copy of the Pan Card of the Trust/Institution
- Copy of electricity bill, house tax receipt, or water bill
- Evidence of welfare activities carried out & Progress Report since the foundation of the NGO or for the previous 3 years
- The statement of accounts and balance sheet since the foundation/previous 3 years
- List of contributors along with their address and PAN
- List of governing body of trustees with their contact details
- Copy of registration granted under section 12A or copy of notification issued under section 10(23)or section 10(23C)
Issue of 80G-Certificate
On receipt of an application, the Commissioner Scrutinize and may ask additional documents or information. After satisfaction of an application, the Commissioner may pass an order in writing registering the Trust/Institution under Section 80G of Income Tax Act.
However, on non-satisfaction of an application, the commissioner may reject the application of an NGO. The registration accorded to the trust will be valid for a period of one-three years.
What are the documents required for claiming Deduction under Section-80G?
- a) Stamped receipt is required for claiming deduction under section 80G. The receipt has to be mandatorily be issued by the recipient trust as it acts as a valid proof of donation. The receipt should contain the details of:
- Name, address & PAN number for the trust/ institution to whom the donation was made to.
- The name of the donor should be mentioned
- The amount donated should be mentioned
- Registration number of the trust under section-80G and validity of registration (registration period).
- b) Photocopy of the 80G certificate
- c) Form 58: Donations that can attract 100% deduction required Form 58 from the trust/ institution. It contains details of the cost of the project, the amount authorized for the project & actual amount collected by the institute.
Note: Without Form 58, your claim for 100% tax deduction can be rejected even if you have a sstamped receipt.
80G Registration – Compliance Requirements
The applicant or recipient of the 80G registration must comply with the requirements specified below:
- The trust/institution applying for the certificate must be duly registered under the Societies Registration Act, 1860; or Section 25 of the Companies Act; or any other relevant Acts.
- The trust/institution should only utilize the donated funds for charitable purposes.
- The registered trust/institution should not hold any income which is not exempted.
- Trust/institution pursuing any other businesses is required to maintain a separate account for receiving the donations.
- The applicant should have maintained the appropriate annual returns, accounting and book keeping before applying for the certificate.
- Timely renewal of certificate is compulsory to obtain tax benefits.
Proof of Payment
- An Assessee who claims the deduction under Section 80G has to furnish the proof of payment. The receipt issued by the Donee Institute to get the benefit of deduction should be submitted by the assessee.
- The receipt should have the Name, Address, PAN and the registration number of Donee under Section 80G of Income Tax Act along with the validity of the registration and amount donated by the donor.
Which are the donations eligible for 80G exemption?
Donations Eligible for 100% Deduction without Qualifying Limit
- National Defence Fund (NDF) set up by the Central Government
- Prime Minister’s National Relief Fund (PMNRF)
- National Foundation for Communal Harmony
- An approved university/educational institution of National eminence
- Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
- National Illness Assistance Fund
- Fund set up by a State Government for the medical relief to the poor
- National Blood Transfusion Council or to any State Blood Transfusion Council
- The National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities
- National Sports Fund
- National Cultural Fund
- Fund for Technology Development and Application
- National Children’s Fund
- Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
- The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
- The Maharashtra Chief Minister’s Relief Fund during October 1st, 1993, and October 6, 1993
- Chief Minister’s Earthquake Relief Fund, Maharashtra
- Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of the earthquake in Gujarat
- Any trust, institution or fund to which Section 80G (5C) applies for providing relief to the victims of the earthquake in Gujarat (contribution made during January 26th, 2001, and September 30th, 2001) or
- Prime Minister’s Armenia Earthquake Relief Fund
- Africa (Public Contributions – India) Fund
- Swachh Bharat Kosh (applicable from Financial Year 2014-15)
- Clean Ganga Fund (applicable from Financial Year 2014-15)
- National Fund for Control of Drug Abuse (applicable from Financial Year 2015-16)
Donations Eligible for 50% Deduction without Qualifying Limit Jawaharlal Nehru Memorial Fund
- Prime Minister’s Drought Relief Fund
- Indira Gandhi Memorial Trust
- Rajiv Gandhi Foundation
Donations Eligible for 100% Deduction Subject to 10% of Adjusted Gross Total Income
- Donations to the government or any approved local authority, institution or association to be utilized for the purpose of promoting family planning
- Donation by a Company to the Indian Olympic Association or to any other notified association or institution established in India for the development of infrastructure for sports and games in India, or the sponsorship of sports and games in India.
Donations Eligible for 50% Deduction Subject to 10% of Adjusted Gross Total Income
- Any other fund or any institution which satisfies the conditions mentioned in Section 80G(5)
- Government or any local authority, to be utilized for any charitable purpose other than the purpose of promoting family planning
- Any authority constituted in India for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or both
- Any corporation referred to in Section 10(26BB) for promoting the interest of the minority community
- For repairs or renovation of any notified temple, mosque, gurudwara, church or other places.