INCOME TAX DEDUCTION U/S 80 G
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Section 80g of the Indian Income Tax Act provides a tax deduction for donations made to certain approved charitable funds and institutions. Donors can receive a 50% tax deduction for donations to organizations with 80g certification. Both individuals and companies are eligible for this deduction. Organizations must apply for and receive 12a and 80g certification from the Income Tax department to issue donors with tax exemption certificates. 80g certification is granted to nonprofit organizations for social welfare activities and is valid for 1-3 years, while 12a registration has lifetime validity. Donations qualify for full or 50% tax deductions depending on the organization and if they are below or above certain qualifying limits.
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INCOME TAX DEDUCTION U/S 80 G
- 1. What is 80g? • Section 80g offers a tax deduction for donations to certain prescribed funds and charitable institutions.
- 2. Benefits of 80g • Those organizations who donate to NGO under section 80g, they get deduction of 50% in their tax.
- 3. Eligible Assesses for 80g • This section is applicable to all Ngo, who make an eligible donation, whether an individual, HUF, NRI or a company.
- 4. Applying for 12a Certification • shall ensure the acceptance of the organization by Income Tax department. After getting the 12a certification the Ngo organization gets the perfect legal entity. The entire tax of ngo is exempted.
- 5. Apply for 80g certification By showing their record of achievements in social welfare activities and by proving their service to the public. By getting this 80g certification, organization are privileged to provide tax exemption to the donors who donates their organization.
- 6. That is when an organization receives donation from public, individual or from a group it shall issue 80g tax exemption to the donor, where donors are entitled to donate from their 10% of gross total annual income. In that 10% of their donation, donors shall receive 10% tax exemption for their donation. So this type of certification, gives the power to the organization to encourage their donation to donate more .
- 7. What is the validity period of the registration under section 12A and 80G of Income Tax Act? • 12A registration : Lifetime validity • 80G registration : 1 to 3 years • validity
- 8. When you apply for 80g you shall check yourself for the fitness of 80g approval under the following factors. 1. If nonprofit Ngo organization is under going with any business, then they have to maintain a separate account and should not mix the donations they receive for social cause. 2. Other than charitable cause the organization or its byelaw should not represent any other causes towards spending of such donation amounts or the assets and incomes of the nonprofits Ngo organization.
- 9. 3. The nonprofit Ngo organization shall not be able to apply for 80 g if it support religion based, caste and creeds based activity. 4. The nonprofit Ngo organization should have the qualification of registration which might have been registered under Societies registration act 1860 or registered under section 25 of Companies act 1956.
- 10. 5. Proper annual returns, accounting, book keeping should be in manner before applying for 80 g. 6. If you have already received the 80 g certificate, then proper renewal is must to hold such tax benefits. Income tax department has the power to approve or reject such approval upon disqualification of the nonprofit organization or dissatisfaction found by the department towards the nonprofit Ngo organization activities.
- 11. Donations with 100% deduction without any qualifying limit . 1. Prime Minister’s National Relief Fund 2. National Defense Fund 3. Prime Minister’s Armenia Earthquake Relief Fund 4. The Africa (Public Contribution - India) Fund
- 12. 5. The National Foundation for Communal Harmony 6. Approved university or educational institution of national eminence 7. The Maharashtra Chief Minister’s Earthquake Relief Fund 8. Donations made to Zila Saksharta Samitis. 9. The National Blood Transfusion Council or a State Blood Transfusion Council. 10. The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air Force Central Welfare Fund.
- 13. Donations with 50% deduction without any qualifying limit 1. Jawaharlal Nehru Memorial Fund 2. Prime Minister’s Drought Relief Fund 3. National Children’s Fund 4. India Gandhi Memorial Trust 5. The Rajiv Gandhi Foundation
- 14. Deduction amount u/s. 80g. Donations paid to specified institutions qualify for tax deduction under section 80G but is subject to certain ceiling limits. Based on limits, we can broadly divide all eligible donations under section 80G into four categories: a) 100% deduction without any qualifying limit (e.g., Prime Minister’s National Relief Fund).
- 15. b) 50% deduction without any qualifying limit (e.g., India Gandhi Memorial Trust). c) 100% deduction subject to qualifying limit (e.g., an approved institution for promoting family planning). d) 50% deduction subject to qualifying limit (e.g., an approved institution for charitable purpose other than promoting family planning).