NGO can avail income tax exemption by getting itself registered and complying with certain other formalities, but such registration does not provide any benefit to the persons making donations.
The Income Tax Act has certain provisions which offer tax benefits to the "donors".
All NGO's should avail the advantage of these provisions to attract potential donors. Section 80G is one of such sections.
If an organization has obtained certification under section 80-G of Income Tax Act then donors of that NGO can claim exemption from Income Tax.
If an NGO gets itself registered under section 80G then the person or the organization making a donation to the NGO will get a deduction of 50% from his/its taxable income
TAX EXEMPTION LIMIT ON DONATIONS?
There is a limit on how much money can be exempted from the Income Tax.
If the amount of deduction to a charitable organisation or trust is more than 10% of the Gross Total Income computed under the Act (as reduced by income on which income-tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), then the amount in excess of 10% of Gross Total Income shall not qualify for deduction under section 80G.
The persons or organisation who donate under section 80G gets a deduction of 50% from their taxable income. Here at times a confusion creeps in, that the tax advantage under section 80G is 50%, but actually it is not so. 50% of the donation made is allowed to be deducted from the taxable income and consequently tax is calculated.
The ultimate benefit will depend on the tax rates applicable to the assessee.
REQUIREMENTS FOR GETTING 80G CERTIFICATE
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 incomes 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.
- By laws 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 1956 / or Section 8 of Companies Act 2013
- Trustees or governing body members are not drawing any undue benefits from NGO funds.
- The persons or organisation who donate under section 80G gets a deduction of 50% from their taxable income
- NGO can avail more donations /funds by providing 80G Registration Benefit to Donors
- All Registered NGOs (Society, Trust, Non Profit Company)
Who Can Apply: