Benefits of Registration of NGO under section 80G

Why required 80G registration for NGO?

An NGO is issued 80G registration under the Income Tax Act by the Income Tax Department. The objective behind providing 80G certificate is to encourage more donors and more donations to come to such organizations. The benefit that a donor benefits from donating to organizations with 80G and NGO registration is that he gets a tax exemption of up to 50% of his donation. The donor is allowed to deduct these donations from his gross total income. The donor has to attach the stamped receipt issued by the NGO to avail the tax exemption. The name of the organization, date and PAN should be mentioned in the receipt.

What is the eligibility for 80g?

Not all NGOs or Trusts are eligible for 80G registration. To achieve this it is necessary to follow certain rules. These are listed below:

• Donation to charity u/s 80G,
• The NGO duly constituted as a Public Charitable Trust or registered under Section 25 of the Companies Act, 1956. It may be a society registered under the Companies Act'2013 or a section 8 company or a University established by law or any other entity. Affiliation to any University established by law. An institution fully or partially financed by a government or local authority.
• Following are the details under which the government can reject your claim for 80G certification:

1. No religious activity: Charity involves religious preaching, or is done for a particular caste or creed,
2. Separation of Business and Charity: If the entity is involved in any business/financial transaction that is not attributable to charity alone, you must keep the two separate. And, your business may not qualify for 80G registration.
3. No Misuse: Donations received for the cause should not be used for any other purpose even within the organization. A strict accounting is mandatory.
4. Diversion of funds: Your 80G certification request will be rejected if the NGO receives funds from a political party or gifts are given to trusts operating outside India.
5. There should not be any non-exemption to the registered trust/institution/section 8 company.

What is the procedure of company registration under section 80G?

The most important requirement for getting 80G Company registration in India is to be registered under section 12A. After that:

• The application must have Form 10G with the Commissioner of Income Tax.
• The application is to be attached with the following documents:

1. Registration Certificate and MoA / Trust Deed
2. No Objection Certificate (NOC) from the landlord (where the registered office is located),
3. NGO's PAN card copy,
4. Address proof, as in copy of electricity bill / house tax receipt / water bill,
5. Proof and progress report of welfare activities since incorporation, or in the last 3 years,
6. List of Governing Body Board of Trustees members with their contact details
7. Statement of Accounts, Balance Sheet, Income Tax Return Documents Since incorporation or in the last 3 years,
8. List and details of donors, such as their address and PAN,
9. Copy of registration u/s 12A or copy of notification issued under section 10(23) or section 10(23C).

What is the Certification of company/NGO under section 80G:

• On receipt of the application, the Commissioner of Taxes will scrutinize the details. He may ask for some additional documents or information. Once satisfied, he can pass an order to register the trust/entity under section 80G of the Income Tax Act. If not, he may reject the application.
• The time limit for passing an order of approval or disapproval by the Commissioner shall not exceed 6 months from the end of the month in which such application was made.
• In computing the period of 6 months, any time wasted by the applicant by non-compliance with the instructions of the Commissioner shall be excluded.

Also Read, Benefits of NGO registration U/S 12A

What are the benefits of 80G Company registration under the Income Tax Act?

Benefits of 80G registration under Income Tax Act

The donor will be directly benefited by the registration of the NGO with 80G. He is entitled to claim tax deduction, using the receipt of donation received by you. In other words, he can use the 80G registration of your NGO to deduct the amount that he has donated to your organization from his total taxable income.

There will be three-fold benefits of this registration:

• As a society by law, 80G registration makes your NGO a promising prospect, boosting its goodwill and the confidence of people associated with your brand.
• It brings joy to the donor about contributing to a good cause while simultaneously reducing the taxable income attached to it.
• Only an NGO with 12A and 80G registration is eligible for government funding.
• Getting an 80G registration also facilitates seeking foreign contributions.