80G Registration

Are you a nonprofit organization looking for ways to receive donations while also giving your donors tax benefits? Well, look no further as the answer lies in obtaining 80G registration in India. This registration allows donors to receive tax exemptions on their donations to your organization, making it a win-win situation for both parties. However, before diving into the process of obtaining the registration, it’s important to understand what it is and how it works. In this blog post, we’ll discuss everything you need to know about the 80G registration in India, from its benefits to the application process, so you can start receiving donations and making a difference in the community.

1. What is an 80G Certificate and Registration in India?

Are you aware of the benefits of registering your NGO under Section 80G of the Income Tax Act? 

If your NGO is registered, those who donate funds to your organization can receive a deduction of 50% from their taxable income. To obtain registration, you need to apply to the Principal Commissioner or Commissioner at least six months before the end of the provisional registration period, or within six months of the commencement of activities. The provisional registration is valid for three years and can be renewed at the end of this period. The renewed registration is valid for five years and must be renewed after each period. Note that all existing 80G approvals must be revalidated by submitting an application within three months from 1st April 2021.

Have you heard of the 80G certificate? 

This certificate exempts you from paying taxes if you have made donations to charitable trusts or organizations that are registered to offer tax deductions. For instance, if you donate to a trust or organization registered under section 12A, you can avail of tax exemption under section 80G. Note that there is a maximum allowable deduction criterion whereby the excess amount over 10% of the total gross income will not qualify for tax benefits. Donations made to foreign trusts, printing, or publishing of brochures, flyers, and pamphlets do not qualify for deductions under section 80G.

Do you wish to claim deductions under 80G? 

You need a stamped receipt from the recipient trust with details such as name, address, PAN number, name of the donor, and amount donated in both numeric and words. Claim deductions with 100% exemption under PM relief fund, Indira Gandhi Memorial Trust, institutions promoting family planning, and those trusts listed under the certificate with 50% exemption. Furthermore, it is essential to mention the registration number issued by the income tax department under section 80G and the validity of the receipt. Donations made as gifts do not qualify for tax exemption, but donations made in kind during a disaster like floods or earthquakes qualify. 

2. Eligibility for Tax Savings under Section 80G

Are you considering donating to charitable organizations in India? It is a noble gesture that not only benefits society but also provides tax savings under Section 80G of the Income Tax Act. Non-profit organizations that perform charitable activities must obtain an 80G certificate to qualify for such deductions and tax benefits. These charities attract donations from individuals and corporations, so stringent measures are in place to ensure transparency and efficiency. To claim this deduction, you must have made donations to prescribed funds, which range from 100% to 50%, subject to certain restrictions outlined in Section 80G.

As a taxpayer, you can make the most of tax savings opportunities by claiming deductions under multiple sections like 80C and 80G. However, it is crucial to understand the eligibility criteria for claiming tax benefits under Section 80G. The deduction is available to individuals who donate to prescribed funds that perform charitable activities. The donation is eligible for a deduction of up to 100% or 50% with or without restrictions, as specified in Section 80G. It is essential to note that not all donations are eligible for deductions under this section, and the benefits are not available in the new tax regime.

You can claim deductions under Section 80G when you make donations using specific modes of payment, such as cheques, demand drafts, or electronic transfers. Cash donations below ₹2000 are also eligible for deductions. However, in-kind contributions such as food, clothes, and medicines don’t qualify under this section. It is crucial to mention the amount and mode of donation made to charitable organizations in your ITR. Thus, claiming deductions under Section 80G is a useful tax-saving option that not only benefits society but also helps you lower your tax liability. 

3. Criteria for Claiming Tax Deduction under 80G

If you are planning to donate to charitable institutions or relief funds, you may be eligible for a tax deduction under Section 80G of the Indian Income Tax Act. To claim this deduction, it is important to meet certain criteria. First and foremost, you should ensure that you have donated to the right kind of institution or fund. Not all donations are eligible for deductions under Section 80G. Make sure that the institution or fund you donate to is listed under the prescribed funds, which qualify for a deduction.

Secondly, it is worth noting that individuals are eligible for different deductions depending on the institution or fund to which the donation has been made. The deductions may range from 50% to 100% of the donated amount. However, do keep in mind that the claim for a deduction should not exceed 10% of the gross total income, as prescribed by the government.

Lastly, it is important to note that this deduction is not available if you opt for the new tax regime. You can claim deductions under Section 80G while filing your tax returns by submitting details of the contribution made, including the breakup of cash and non-cash contributions, in the respective tables given in the ITR. Make sure to keep receipts of the donation with you, which should contain the name and address of the institution or fund, the amount donated, and the registration number of the institution or fund under Section 80G. By meeting the above criteria, you can claim deductions under Section 80G and save on taxes! 

4. Requirements for Donations Eligible for 100% Deduction

To claim a 100% deduction under Section 80G of the Indian Income Tax Act, certain requirements must be met. Firstly, the donation must be made to one of the specified funds or institutions approved by the government. These include the National Defence Fund, Prime Minister’s Armenia Earthquake Relief Fund, and National Blood Transfusion Council, among others. Secondly, the donation must be made through a mode other than cash, such as a cheque, demand draft, or bank transfer. Cash donations above Rs. 2000 are not eligible for deduction under Section 80G. Additionally, the donor must obtain a receipt from the fund or institution that contains specific details such as the institution’s name, PAN, 80G registration number and validity, and the donor’s name and address. It is important to note that without Form 58A, a donation will not be eligible for a 100% deduction. By following these requirements, you can ensure that your donation is eligible for maximum tax benefits. 

5. Importance of 80G Registration

As an NGO, you may be looking for ways to attract potential donors and receive income tax exemptions for your social cause. One such provision under the Income Tax Act is Section 80G, which provides tax benefits to donors contributing to NGOs. If you register your NGO under Section 80G, the donors can avail of a 50% deduction from their taxable income. It is crucial to note that registration under 80G was a one-time registration until the recent amendment to the Finance Act 2020. The new process involves applying for fresh registration, which provides provisional registration for three years. Renewal of this registration needs to be submitted at least six months before the expiry of validity. The registration shall be valid for three years from the Assessment Year requested.

The existing 80G approvals need to be revalidated, and the application for revalidation should be submitted within three months from 1st April 2021, as per the amended provisions. The revalidation of registration shall be valid for five years, and thereafter, approval for 80G needs to be applied again at least six months before the expiry of the registration. The process of registration and renewal of 80G has become simpler and more accessible with the E-filing portal of the IT department, where you can submit Form 10A/10AB with relevant documents. The 80G registration not only enhances the credibility and reliability of your NGO but also incentivizes donors to contribute to your social cause and receive tax benefits. So, register your NGO under Section 80G to attract potential donors and make a substantial difference. 

6. Validity Period of 80G Registration

If your NGO is registered under Section 80G of the Income Tax Act in India, it is important to note its validity period. The latest updates state that the validity of the 80G certificate will now be five years, contrary to the perpetuity of registration that existed before. This means that NGOs will have to renew their 80G certificate every five years to continue availing of the tax benefits. Therefore, it is crucial to keep track of the expiry date of your 80G registration and apply for renewal well before the certificate expires.

To ensure that your organization’s 80G registration stays valid, it is recommended that you renew it at least six months before the expiry of your old certificate. This means that if your trust was granted an 80G registration in 2022-2023, it would remain valid between that period until 2027-2028, after which you would need to apply for renewal before the expiry date. Renewal of the 80G certificate is necessary to continue enjoying tax exemption on the donations received by the NGO.

Moreover, as per the new updates, all NGOs who receive registration under Sections 12AB, 10(23C), or 80G will have to renew their application for the same every five years. This implies that they will have to reapply for certification after every five years to continue availing the tax benefits. Hence, it’s imperative to keep track of the renewal dates.

Renewing the 80G certificate can be a time-consuming process, and therefore, it is advised to initiate it well in advance before the expiry of the old certificate. A renewed certificate will help your organization maintain its eligibility for tax exemptions and benefits. Hence, it becomes crucial to keep a tab on the expiry date of the 80G registration and renew it within the validity period, as it is beneficial to the NGO and the donors involved with it. 

7. Necessary Documents for Claiming Deductions under 80G

When donating to a charitable trust or organization, it is important to know the criteria for claiming tax benefits. One such benefit is the 80G certificate, which exempts you from paying taxes either in part or in full. However, there are certain conditions to be met, such as maximum allowable deduction criteria. The aggregate amount of donations should not exceed 10% of the total gross income to qualify for tax benefits. Donations to listed trusts and organizations only qualify for deduction under section 80G.

To be eligible for tax savings under 80G, a person who makes an eligible donation should receive the certificate. If donations are made to a foreign trust or political party, you cannot claim deductions under section 80G. Donations by NRI qualify for tax exemption if made to eligible institutions and trusts. Employees making donations from salary with the employer’s name on the donation receipt can claim deductions under Section 80G.

If a donation qualifies for a 100% deduction under Section 80G, the trust should also present Form 58 comprising authorized and collected amounts. The receipt issued by the recipient trust should include the name, address, and PAN number of the trust and the donor’s name and amount donated in numeric and words. The receipt should also feature the registration number under section 80G and its validity, which is two years.

While claiming the tax exemption under Section 80G, donating in kind or goods doesn’t qualify. Donations via cash, cheque, or electronic transfer in which the receipt is stamped are considered valid. Donations made in cash exceeding Rs. 2000 will not be eligible for the deduction under Section 80G. During the ITR filing process, it is essential to have the donation receipt and Form 10BE readily available. Form 10BE serves as evidence to support your claim for the deduction. Lastly, ensuring the actual donation amount matches the information provided in Form 10BE before filing ITR is crucial. 

8. Mode of Payments Eligible for Tax Deduction under 80G

When making charitable donations, it is important to know which mode of payment is eligible for a tax deduction under Section 80G of the Indian Income Tax Act. Taxpayers can claim deductions for donations made through cash, cheque, electronic transfer, or bank draft. However, it is important to note that in-kind contributions such as food, clothes, and medicines are not eligible for deductions under Section 80G. Donations exceeding ₹2000 must be made through modes other than cash to be eligible for tax deductions. This ensures that the donations made are legitimate and can be tracked.

Under Section 80G, donations made to specific prescribed funds and institutions are eligible for deductions ranging from 50% to 100% with or without restrictions. It is essential to check whether the organization to which you have donated is eligible for deduction under Section 80G. Not all non-profit organizations receive 80G certification, and contributions made to private trusts or political parties cannot avail of any tax exemption. Only donations made to charitable organizations under Section 80G receive an 80G deduction and registration.

To claim a tax deduction under Section 80G, one must obtain a receipt or an 80G certificate from the charitable trust or institution to which the donation has been made. The receipt should contain the details such as the name and address of the institution, the amount donated, and the registration number under Section 80G. This is to ensure that the donations made are tracked and can be verified by legal authorities if needed. Understanding these guidelines enables taxpayers to take advantage of Section 80G and save on their taxable income. 

9. Non-Qualifying Donations for Tax Savings under Section 80G

If have been contemplating donating to a charitable organization in India, you might be wondering about the tax benefits associated with it. Under Section 80G of the Indian Income Tax Act, you can claim deductions for contributions made to certain relief funds and charitable institutions. However, it is important to note that not all donations are eligible for such deductions. Only donations made to prescribed funds qualify for the exemption.

Before donating, ensure that the organization has a valid 80G certificate. NGOs and other non-profit organizations must register and validate themselves with the Income Tax Department to receive such certifications. If the organization does not have the necessary paperwork, your donation will not be eligible for any tax benefits.

Under Budget 2023, donations made to the Prime Minister’s National Relief Fund, the National Foundation for Communal Harmony, and the Prime Minister’s Drought Relief Fund will not be eligible for deductions under Section 80G. If you donate to any of these funds, you will not be able to claim a tax exemption on the amount donated.

It is important to keep in mind the mode of payment when donating. Donations made in cash for amounts below Rs. 2000 are eligible for deductions under Section 80G. However, in-kind contributions or donations above Rs. 2000 made in cash do not qualify for such deductions. Donations exceeding Rs. 2000 must be made through other modes of payment to be eligible for exemption under Section 80G.

To claim the tax deduction under Section 80G, you need to furnish details such as the amount of contribution and the mode of payment in your income tax return. Donations eligible for 100% deduction without qualifying limit include the National Defence Fund and the Chief Minister’s Relief Fund. Donations eligible for a 50% deduction without a qualifying limit include the National Trust for Welfare of Persons with Autism. Keep these details in mind before donating to ensure maximum tax savings. 

10. Benefits of 80G Registration in India

When it comes to running an NGO, fundraising is crucial to making your efforts go a long way. One way to encourage donors to contribute towards your cause is by getting registered for Section 80G of the Income Tax Act. This registration gives donors the benefit of a deduction of up to 50% from their taxable income. This is a sizable benefit that can encourage more people to invest in your cause. Furthermore, this registration can be obtained by all NGOs that have properly registered under Section 12A.

The benefits of 80G registration in India are not limited to just donors. A registered NGO can also access several government grants and help it take up more social causes. This registration also enhances the credibility of the organization, making it a more promising prospect for potential investors. This is because the benefits of your NGO being 80G certified are not exclusive to your donors. Your NGO’s reliability will also go up, making it an attractive proposition when looking to get funding from corporate social responsibility (CSR) initiatives.

Additionally, 80G certification enables donors to significantly reduce their taxable income while donating to an NGO. This incentive works towards mobilizing more social investments as people are more likely to donate to causes that provide substantial benefits. By registering for 80G, you significantly increase your NGO’s chances of success. Overall, getting an NGO registered under 80G can give it a significant edge, making it easier for you to achieve your social objectives and get more donors to contribute towards your cause. 

11. Disadvantages of 80G Registration in India

If you are planning to register your non-profit organization under section 80G of the Income Tax Act, it is important to note that there are some disadvantages to consider. Firstly, not all donations made to the organization will be eligible for tax deductions under this section. Only donations made to specific funds and institutions as identified by the Income Tax Department qualify for this benefit. Furthermore, the 80G registration process can be time-consuming and complicated, especially for organizations that are new or have complex structures. You will need to submit detailed documentation and comply with all the conditions specified by the Income Tax Department, which can involve significant administrative effort. Additionally, even after obtaining 80G registration, your organization will still need to maintain regular accounts and ensure compliance with all relevant regulations to avoid any adverse consequences. Finally, it is essential to note that political parties cannot receive 80G registration, and donations made to such entities will not be eligible for any tax benefits. Overall, while 80G registration can provide certain advantages to non-profit organizations, it is essential to carefully consider the potential drawbacks and assess whether this option is suitable for your organization’s needs.