I realized that my articles on registration of charitable trust and society became popular and have been helping thousands of people, so I decide to take this series further and write about more related issues. Today, I am going to talk about exemption user the section 80 of Income Tax Act.
What is the exemption under 80G
Exemption under section 80G gives rebate to a donor on the amount he donates to an organization that has 80g certificate. If the public charitable organization (NGO) has 80G certificate then the donors of that organization would not need to pay tax on the 50% of the donated amount.
How to apply for 80G exemption
Exemption under section 80G is applied on a form called 10G. This form can be downloaded from Income Tax department’s website.
Validity of 80G Exemption
Income tax department issues 80G certificate only for a specific period (usually 1-3 years). After expiry, 80G exemption must be reapplied for and renewed.
Update (June 2014): Now Income Tax department is issuing 80G certificate for lifetime. You would no longer need to get it renewed.
Conditions for getting 80G exemption?
There are a few conditions that must to be fulfilled if you want to apply for exemption under the section 80G:
- NGO should not have any income which are not eligible for exemption. For example, business income. lf, the NGO has business income then it should maintain separate books of accounts and should not divert donations received for the purpose of such business.
- Bylaws or objectives of the NGOs should not contain any provision for spending the income or assets of the NGO for purposes other than the charitable objectives mentioned in the Trust Deep or Rules of Association.
- NGO should not be working for the benefit of particular religious community or caste.
- NGO maintains regular accounts of its receipts & expenditures.
- NGO is properly registered under the Societies Registration Act 1860 or under any law corresponding to that act or is registered under section 25 of the Companies Act 1956.
- Trustees or governing body members are not drawing any undue benefits from NGO funds.
Documents required for registration of 80G certificate
- Dully filled in Form – 10G for registration u/s 80G registration;
- Registration Certificate and MOA /Trust Deed (two copies – self attested by NGO head);
- NOC from landlord (where registered office is situated);
- Copy of PAN card of NGO;
- Electricity Bill / House tax Receipt / Water Bill (photocopy);
- Evidence of welfare activities carried out & Progress Report since inception or last 3 years;
- Books of Accounts, Balance Sheet & ITR (if any), since inception or last 3years;
- List of donors along with their address and PAN;
- List of governing body I board of trustees members with their contact details;
- Original RC and MOA /Trust Deed for verification;
- Authority letter in favor of NGO Factory;
- Any other document I affidavit / undertaking I information asked by the Income Tax department
When can you apply for 80G exemption?
Exemption certificate u/s 80G can be applied for just after the registration of NGO is completed.
Where is 80G to be applied?
80G can be applied for at the office of Commissioner of Income-tax (Exemption) having jurisdiction over the institution.