80G Registration in India

Are you aware of the benefits that come with 80G registration in India? As a non-profit organization, receiving donations is a crucial aspect of your operations. These donations not only help sustain your organization but also account for a major portion of your budget. However, with the introduction of tax benefits through the 80G registration, donors can now enjoy tax deductions on their contributions, while non-profits can attract more donations. In this blog post, we will help you understand what 80G registration entails, the benefits associated with it, and the process of getting registered. So, stay tuned and learn more.

1. Introduction to 80G certificate and registration in India

In India, NGOs looking to attract potential donors can avail of tax benefits by getting themselves registered under certain provisions of the Income Tax Act. One such provision is section 80G, which allows donors to claim a deduction of 50% from their taxable income. However, the recent Finance Act 2020 has brought about some substantial changes to the registration process and the period for which approval will be given. An NGO must now submit an application for fresh registration under section 80G to the Principal Commissioner or Commissioner, and a provisional registration for 3 years will be given. The registration once granted shall be valid for three years from the Assessment Year from which the registration is sought. Application for renewal of such new registration needs to be submitted- at least six months before the expiry of the validity period or- within 6 months from the commencement of activities.

Existing registration under 80G was given as a one-time registration unless any specific restrictions are provided in the registration certificate itself, but now, all existing approvals need to be revalidated as per amended provisions of the Finance Act 2020. The application for revalidation of registrations will be valid for 5 years, and after this period, approval for 80G has to be reapplied for at least 6 months before the expiry of the registration. To apply for registration or renewal of registration under section 80G, the NGO must visit the e-filing portal of the IT Department and fill out Form 10A/10AB, attaching all relevant documents like the self-certified copy of incorporation documents of Trust/Societies, self-certified copy of the registration with the Registrar of Companies or Firms and Societies or Registrar of Public Trusts, self-certified copy of FCRA registration, and copies of annual accounts audit report u/s 44AB for the past 3 years, among others.

It is imperative to note that some scammers may ask for PINs, passwords, or similar access information for credit cards, banks, or other financial accounts through e-mail. The Income Tax Department appeals to taxpayers never to share such information and report these incidents of phishing immediately to security@incometaxindia.gov.in. The official website of the Central Board of Direct Taxes (CBDT) has a detailed list of exempted institutions under the Income Tax Act, subject to change without notice. Although reasonable efforts are made to ensure the validity, accuracy, and integrity of all information provided therein, the webmaster makes no warranty, express or implied, or assumes any legal liability or responsibility for the accuracy or completeness of any information on the site.

2. Eligibility criteria for availing tax savings under 80G

To avail of tax savings under Section 80G of the Income Tax Act in India, it is important to determine if the donation made qualifies for a tax deduction. Only donations made to prescribed funds and institutions are eligible for deductions under this section. Individuals who have donated to charitable trusts or non-profit organizations can claim deductions ranging from 50% to 100%. However, it is important to note that not all donations are eligible for deductions under Section 80G. To claim this deduction, NGOs and other non-profit organizations must register and validate themselves with the Income Tax Department and obtain the necessary paperwork, including an 80G Certificate.

To claim a deduction under Section 80G, taxpayers must fall under the eligibility criteria defined by the Income Tax Act. All taxpayers regardless of whether they are residents or non-residents, who have donated money to prescribed funds, institutions, or associations can claim a deduction from their gross total income. However, this deduction benefit is only available to taxpayers who have opted for the old tax regime for a particular financial year. Taxpayers under the new tax regime cannot avail of this deduction benefit.

To calculate the maximum amount allowable under Section 80G, taxpayers must first compute their adjusted gross total income. The adjusted gross total income is calculated by reducing the amount deductible under Section 80C to 80U (Except Section 80G), share of profit in Association of Persons (AOP) eligible for rebate under Section 86, short-term capital gain arising from securities specified under Section 111A, any income referred to in Sections 115A, 115AB, 115AC, 115ACA, 115AD, and 115D from their gross total income. The qualifying limit for donations must be calculated, which is 10% of the adjusted gross total income. If the total amount donated exceeds the qualifying limit, any excess amount beyond the 10% limit will not be eligible for deduction.

In conclusion, Section 80G permits certain charitable contributions made in India to be deducted from taxable income. To avail of tax savings under this section, it is important to register and validate with the Income Tax Department to receive an 80G certificate. Taxpayers must opt for the old tax regime for a particular financial year to claim deductions under Section 80G. The eligibility criteria for claiming deductions under this section must be met, and deductions ranging from 50% to 100% can be claimed. Taxpayers must compute their adjusted gross total income to determine the qualifying limit for donations, and only donations made to prescribed funds and institutions qualify for deductions under this section.

3. Criteria for deductions and exemptions under section 80G

When it comes to making donations to charitable organizations in India, taxpayers can benefit from deductions and exemptions under section 80G of the Income Tax Act. However, not all donations made to nonprofit organizations are eligible for such benefits. The eligibility criteria for taxpayers to claim deductions and exemptions under section 80G include making contributions only to prescribed funds that have obtained an 80G certificate. To receive such certification, NGOs and other non-profit organizations must undergo validation by the Income Tax Department. The government supports charitable activities by providing tax benefits and deductions to such organizations. However, it is essential to note that donations made to trusts outside India and to private trusts without 80G registration are not eligible for tax deductions.

To claim deductions and exemptions under section 80G, taxpayers must comply with certain specifications regarding the mode of payment, percentage eligible for a deduction, and more. The government mandates that all contributions made to charitable institutions must be through cheques or demand drafts. Cash contributions of over ₹10,000 do not qualify for tax exemption. Additionally, any contributions like clothes, gift items, or food cannot be claimed as a donation for tax exemption. Taxpayers can claim deductions when they make donations through modes other than cash. As per Section 80G, donations to individual funds receive a 100% tax exemption, and others are eligible for a 50% tax exemption, with or without restrictions.

Through section 80G, the Indian government promotes charitable donations and recognizes the valuable contributions of nonprofit organizations. Taxpayers can play their part by making donations to the right organizations and complying with the eligibility and criteria for deductions and exemptions under this section. By doing so, they not only contribute to society but also save taxes while doing it.

4. Documents required for claiming deductions under 80G

To claim deductions under Section 80G, certain documents need to be submitted. First and foremost, a stamped receipt from the recipient trust is required. This receipt needs to have the name, address, and PAN number of the trust, as well as the name of the donor. The amount donated should be mentioned in both numeric and words. For donations that can attract a 100% deduction, Form 58 from the trust should also be submitted. The registration number of the trust under 80G should also be printed on the receipt, along with its validity. A photocopy of the 80G certificate is also required along with the receipt. Without these documents, one would not be able to claim deductions under Section 80G.

5. Mode of payments eligible for a tax deduction

Section 80G of the Indian Income Tax Act allows tax deductions for contributions made to specific charitable institutions and relief funds. By donating to eligible non-profit organizations, taxpayers can claim tax benefits under this section in addition to Section 80C and save on their taxable income. However, not all donations are eligible for deductions under Section 80G, and NGOs must acquire an 80G certificate to qualify. Such organizations must register and validate themselves with the Income Tax Department.

Taxpayers can claim Section 80G deductions for donations made through specific modes of payment. Donations exceeding ₹2000 and in-kind contributions, such as food and clothes, do not qualify for deductions under this section. While cash donations below ₹10000 are eligible for the deduction, all contributions made to charitable institutions must be through cheques or demand drafts. Taxpayers should keep in mind that any donations made to trusts outside India or those without an 80G registration are not eligible for a tax deduction.

Section 80G specifies various types of donations that are eligible for deductions ranging from 100% to 50%. Not all funds come under the 80G category, and only donations to individual prescribed funds receive a 100% tax exemption for the amount paid. Others are eligible for a 50% tax exemption. To claim the deduction under this section, taxpayers need to submit the amount of contribution and the breakup of donations made through cash and other modes.

For donations eligible for a 100% deduction without qualifying limits, taxpayers can make contributions to several funds, such as the National Defence Fund set up by the Central Government and the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities. Donations eligible for a 50% deduction without qualifying limits include contributions to institutions of national eminence, among others. It is important to note that the eligibility for a tax deduction of certain funds may change based on the annual budget.

In conclusion, complying with the eligibility criteria to claim tax deductions under Section 80G can save taxpayers considerable amounts of money while contributing to society. By donating to eligible funds and institutions and adhering to prescribed modes of payment, taxpayers can benefit from this section’s tax exemptions. Non-profit organizations must have stringent measures to ensure transparency and efficiency while also obtaining an 80G certificate to qualify for such deductions and tax benefits.

6. Compliance requirements for 80G registration

NGOs can avail of income tax exemptions by getting themselves registered and complying with certain formalities. However, such registration does not provide any benefits to persons making donations. The Income Tax Act has provisions that offer tax benefits to donors, such as Section 80G. If an NGO is registered under Section 80G, the donor can receive a deduction of 50% of his/her taxable income. Previously, registration under 80G was a one-time registration, but the Finance Act 2020 made substantial changes. An application for fresh registration under Section 80G now needs to be submitted to the Principal Commissioner or Commissioner, and a provisional registration of three years will be granted. This registration is valid for three years from the assessment year in which it is sought. Renewal of registration needs to be submitted at least six months before the expiry of the validity period or within six months of the commencement of activities.

Existing registrations under 80G were earlier valid perpetually. However, the Finance Act 2020 now necessitates the revalidation of existing approvals, with an application submitted by June 30, 2021. The revalidation is valid for five years, and a new application needs to be submitted six months before the expiry of the registration. For renewal, log on to the e-filing portal of the IT department and select Form 10A under the e-file tab. Submit the form with digital signatures or EVC as required while returning the filing. The documents required for Form 10A/10AB include self-certified copies of incorporation documents, registration with relevant authorities, past annual accounts, and details of activities.

To gain income tax exemptions, charitable trusts must establish themselves by the law, with objectives that fall within the definition of the term Charitable Purpose, as defined in Section 2(15) of the Income Tax Act. NGOs can apply for registration under Section 80G for tax benefits. From April 1, 2021, all charitable institutions must apply for a fresh registration under Section 12AB is currently registered under Section 12A/12AA. All other NGOs seeking exemption under Sections 11 and 12 can apply for registration under Section 12AB at least one month before the commencement of the assessment year. Note that new registrations will be provisional for three years from the assessment year.

The latest amendments to Section 80G require all currently approved entities to apply for fresh approval under the new scheme of Section 80G(5). Similarly, new entities applying for registration under Section 80G need to apply for the new scheme. Rule 11AA prescribes the requirements for approval of institutions or funds under Clause (vi) of Sub-section (5) of Section 80G(1). The application needs to be accompanied by self-certified copies of relevant registration certificates.

7. List of eligible organizations and trusts for 80G registration

To encourage donations towards charitable causes, the Indian government provides tax deductions under Section 80G of the Income Tax Act. Taxpayers can claim deductions for contributions made to certain charitable trusts and relief funds registered under this section. It is important to note that not all donations are eligible for deductions, and only those made to prescribed funds qualify. This deduction is not available if an individual has opted for the new tax regime. Donations above Rs 2000 need to be made in any mode other than cash to qualify under Section 80G. Donors can claim up to 100% or 50% deduction, with or without restriction, as per the provisions of this section.

Several organizations and trusts are eligible for registration under Section 80G for tax deductions on donations. This includes the National Foundation for Communal Harmony, the National Defence Fund, approved universities and educational institutions of national eminence, Zila Saksharta Samiti, and funds set up by the state government for medical relief to the poor. The list also includes trusts providing relief to the victims of natural calamities like earthquakes and cyclones: the Chief Minister’s Relief Fund, the Army Central Welfare Fund, the National Blood Transfusion Council, and the Swachh Bharat Kosh. The Clean Ganga Fund and National Fund for Control of Drug Abuse were added in FY 2014-15, and donations to these organizations are eligible for tax deductions.

When applying for 80G registration, it is important to follow the proper guidelines and submit all necessary documents. The applicant must ensure that they meet the eligibility criteria and complete the registration process correctly to receive tax benefits under Section 80G. The registration remains valid for a certain period and may require renewal from time to time. It is important to note that the Income Tax Department can revoke registration if an organization violates any of the rules or regulations. Therefore, it is essential to maintain proper records and follow all guidelines carefully to retain the 80G registration.

Taxpayers should make sure to get a receipt from the organization they donate to for claiming deductions under Section 80G. The receipt should mention the name and address of the organization, the amount donated, and the date of donation. If the donation is made in kind, the receipt should provide a detailed description of the items donated. The mode of donation, whether cash or non-cash, should also be mentioned. Filing the donation receipt details in the respective tables of the Income Tax Return is mandatory for claiming deductions under Section 80G.

Lastly, taxpayers need to keep themselves updated with the changes made to the Section 80G list by the Finance Ministry every year. This helps them determine which donations would be eligible for tax deductions in the respective financial year. Additionally, taxpayers should ensure that their chosen charitable trust or relief fund has proper registration and approval before making any contributions. With the proper documentation, eligibility, and careful adherence to guidelines, taxpayers can make a positive impact and receive tax benefits while supporting social causes through their donations.

8. Photocopy of 80G certificate as a requirement for deduction claims

An 80G certificate is a valuable tax-saving certificate that exempts individuals from paying taxes if they donate to charitable trusts or organizations registered under section 12A. To qualify for tax benefits, the aggregate amount donated should not exceed 10% of the total gross income. Donations made to foreign trusts, and political parties, and printing or publishing of brochures, flyers, and pamphlets are not eligible for tax savings under Section 80G. However, donations made by NRIs to eligible institutions and trusts qualify for tax exemption under this section. Additionally, payments made to Prime Minister Relief Fund receive a 100% deduction without any limit. Deductions made to trusts like Indira Gandhi memorial trust qualify for a 50% deduction without any limit.

For claiming deductions under Section 80G, donors require a stamped receipt issued by the recipient trust. The receipt should include the name, address, and PAN number of the trust to which the donation was made. The receipt should mention the name of the donor and the donated amount both in numeric and words. In cases where donations qualify for a 100% deduction, donors need to ask for Form 58 from the trust. This form comprises the details of the amount authorized and collected. Additionally, donors need to mention the registration number issued by the income tax department under Section 80G, printed on the receipt.

Donations made as gifts and in-kind do not qualify for tax exemption or benefits. Cash or cheque donations made to public charitable trusts, societies, recognized educational institutions or institutions funded by the government qualify for a deduction of 50% from taxable income under Section 80G. If an NGO gets itself registered under Section 80G, donors stand to benefit from a tax saving of 50%. However, the registration process has undergone some significant changes under the Finance Act 2020. Earlier, the approval under Section 80G was valid perpetuity. Currently, all existing 80G approvals need to be revalidated and the application for the same should be submitted within three months from 1st April 2021 i.e., on or before 30th June 2021. The revalidated registrations will be valid for five years, and renewal needs to be applied for at least six months before expiry.

In addition to the stamped receipt, donors need to submit a self-certified copy of the incorporation document of Trust/Societies, registration with Registrar of Companies or Registrar of Firms and Societies, and copies of annual accounts for the applicable period while submitting Form 10A/10AB. However, self-certified copies of the FCRA registration, the existing order approving clause (23C) of section 10, and audit reports under section 44AB also need to be submitted, depending on the case. Moreover, the details of activities since inception or the last three years, whichever is less, need to be furnished in the application for 80G registration.

9. Validity and registration number under 80G registration

Charitable institutions in India are eligible for tax exemptions and benefits under Sections 12A/12AA and 80G of the Income Tax Act 1961. For availing benefits under Section 80G, the institutions need to obtain a registration number. The registration number is provided after the authorities validate the genuineness of the activities carried out by the respective institution. The registration number is mandatory for donors contributing to charitable institutions to claim tax benefits. This registration number is valid for a specified period, and it needs to be revalidated before expiry to continue availing exemptions and benefits.

To continue acquiring exemptions and benefits under Section 80G, the existing charitable institutions need to revalidate their registration numbers by submitting the reapplication form through online mode. The revised application form is Form 10A, which needs to be duly filled with all the required details and relevant attachments. The application form should be submitted online in the IT department’s e-filing portal and verified using an Electronic Verification Code (EVC) or Digital Signature (DS). The last date for the institutions to reapply for registration under Section 80G was 30th June 2021.

The revalidation of the registration number under Section 80G is necessary due to the amendment made by the Finance Act 2020, which mandated the registration of charitable institutions under Section 80G to reapply for approval/registration by 31st August 2020. The amended provision came into force on 1st June 2020, and due to the COVID-19 situation, the CBDT deferred the start date to 1st October 2020. Charitable institutions could reapply for registration until 31st December 2020.

The revalidation of the registration number focuses on the genuineness of the activities carried out by the respective institution. The authorities verify the information provided in the application form and inspect the institution’s premises to ensure compliance with the law’s guidelines. The certificate of registration under Section 80G remains valid for a specified period, usually five years, and requires revalidation before expiry.

In conclusion, the registration number under Section 80G is significant for charitable institutions to avail of tax exemptions and benefits. The revalidation of the registration number is necessary to ensure the genuineness of the institution’s activities carried out and needs to be revalidated before expiry for continuous availing of such exemptions and benefits. Charitable institutions should ensure compliance with the law’s guidelines to avoid any discrepancies during the revalidation process.

10. Disclaimer and legal liability related to 80G registration information

When it comes to obtaining an 80G registration in India, it is important to keep in mind the disclaimer and legal liability related to the information provided. While the government takes reasonable efforts to ensure the accuracy, validity, and integrity of the information, there may be changes without notice. Therefore, NGOs and charitable organizations must seek expert assistance when applying for an 80G registration. Donors should also verify the registration status of the organization they intend to donate before making any contributions. This is to ensure that they can claim the tax benefits that come with donating to a registered NGO. The webmaster of the registration website does not assume any legal liability for any inaccuracies or completeness of the information provided.

The 80G registration offers numerous benefits for NGOs and charitable organizations. This registration makes the organization a promising prospect by enhancing the credibility of the organization and the reliability of those associated with it. Moreover, donors of a Section 80G registered NGO can reduce the amount they donate from their total taxable income, providing an incentive for donations. NGOs who obtain an 80G certification can avail of government funding and secure foreign contributions. It is important to note that any donations made in cash exceeding ₹2000 cannot be deducted from total taxable income. Any donations above ₹2000 should be made in any mode other than cash to qualify as a deduction under section 80G.

It is possible to apply for both section 12A and 80G registrations simultaneously. However, approval does not always come simultaneously, and an organization may have to apply for both separately. Registration under Section 12A is crucial for NGOs as the benefits and exemptions applicable to an NGO would be lost without it. It will assist an NGO in getting its income exempt from tax under Section 80A of the Income Tax Act. In addition to this, it will help secure funds from governments or international organizations by serving as legitimate documentation of the NGO’s existence and social objectives.

In conclusion, obtaining an 80G registration can be an excellent way for NGOs and charitable organizations to receive donations and grants while providing tax benefits to their donors. However, it is important to seek expert assistance when applying for these registrations and ensure that the organization’s registration status is verified before making any contributions. Both Section 12A and 80G registrations are crucial for an NGO’s success, and it is essential to understand the benefits and limitations of each.