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Tax Exemption: Steps for Getting an 80G Certificate

Narendra Kumar

| Updated: Jun 11, 2017 | Category: NGO

Are you looking for the information regarding the 80G Certificate for a tax exemption? Are you looking for the best possible options for donating to a non-profit organization with minimal tax paying options? Here is an account for all the seekers of such a provision. It is a complete account of information regarding the 80G Certificate provided to the non-profit organization.

A Glimpse of 80G Certificate

The 80G Certificate is one granted to the non-profit organizations by the Income Tax department. This is a genuine way to avail the tax deduction on the basis of charity and donations to such organizations. It is a well-planned way to avail such provisions. The Income Tax Department is involved in the intensive scrutiny during the entire procedure. The main objective of the 80G Certificate is to encourage the donors to donate to such funds and organizations. This would provide tax exemption to the donors.

Criteria to be Followed for Availing 80G Certificate for Tax Exemption

The non-profit organization that is required to apply for the 80G Certificate must follow the procedure given below:

Step 1: The organization must fill in a 12A Certificate so that the 80G Certificate process can be initiated.

Step 2: Another Form 10G must be filed for further procedure.

Step 3: An activity report for the past one to three years of the workings of the non-profit organization must be provided by the audited statement. In some cases, it is to be provided from the date of establishment.

Step 4:All the forms of the audited statement and other documents are submitted with the 80G Form to the department.

Step 5: After the scrutinizing of the application, an inspection is done at the premises of the organization by the Income Tax official.

Main Factors for the NGOs and Not-for-Profit Organizations to Avail the 80G Certificate

It is important to note that not all non-profit organizations are eligible for this certificate. There is proper documentation and legalized procedures that must be done in order to achieve this certificate by the NGOs and not-for-profit organizations. The organizations which follow any of the below-mentioned factors will not be covered by the 80G Certificate by the Income Tax Department.

The aims and objectives of the organization must be clear.

In case the organization is involved in any business-related activity, then the funds raised by the donation should not be used for the business work. The funds must be strictly maintained for charity purposes only. In other words, the organization should not intermingle the charity and social cause with the business case. If that is done, then the 80G Certificate will not be provided under the Income Tax Act.

Proper documentation and accounting of the organization must be maintained.

The organization applying for the 80G Registration must achieve well-planned and organized accounting standards. The entire money in form of donations must be used for a social cause only. This must be further reflected in the accounting and documentation of the organization. The Income Tax Department will provide the 80G Certificate after all the legality and verification is done.

Unbiased towards any faith, belief, or culture

The organization that applies for the 80G Certificate must not follow any kind of religious, caste, creed, or any other form of bias. In case any such involvement is found, then the certificate for tax exemption will not be issued by the Income Tax Department.

The organization must be registered

The non-profit organization must be registered under the Societies Registration Act 1960 or under Section 25 of the Companies Act 1956. In case proper registration is not done, then the 80G Certificate will not be availed.

Documentation Required to Avail the 80G Certificate by the Donors

There is an entire procedure that has to be fulfilled in order to achieve the tax exemption policy under the 80G Certificate by the Income Tax Department. The donors are required to fulfill the returns documents. The charity donors are also required to provide these documents with the usual set of documents to avail the 80G Certificate policies. The documentation includes:

Receipt issued by the non-profit organization

The donors are required to produce a receipt for the donation or charity that they have made under the NGO Registration. It is mandatory to have a receipt, once a trust or fund receives a donation in any form. The receipt is required to be stamped by the authority of the organization that is accepting the charity. The receipt must also include the name, date, and the PAN Number particulars. The stamped receipt is one of the most important documents required to achieve the 80G Certificate related tax deduction policy.

Filled-in Form 58

The donations, which are intended to be a 100% tax deduction, must produce a Form 58 for final procedures to be done.

The charity donors must note that it is important to have proper documentation of all these particulars in order to achieve the best possible results of the 80G Certificate. The policy is under keen observation by the IT Department and thus, should fulfill all of the criteria according to them.

A form of Donations Under the Income Tax Act for 80G Certificate

It is important to note the forms of donation and charity. The forms can be multiplied, but the most appropriate form of donation can help in the ease of a successful transaction.

  • The contributions to the particular fund or trust must be made in the form of cheques or demand draft. This is the most convenient way to obtain donations and charity under the 80G Certificate. There is no restriction on the amount of donation involved in the transaction of cheques and demand drafts.
  • The cash transactions made for the donations must not exceed Rs. 10,000/- for the eligibility of tax deduction policy.
  • The transaction of charity in any other form of gifting, food items, clothing, and much more will not be entitled under this act of the tax deduction policy of Income Tax Department.
Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

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1 Comment

Registration Process of 12A and 80G Certificate – GST GURU     January 11, 2019 at 9:28 pm

[…] Exemption certificate under Section 12A and 80G can be applied immediately after the registration of NGO. The application for 12A and 80G certificate can be filed together or can file separately as well. The application under Section 12A needs to be filed the application under Section 80G. The applications shall be a file with the commissioner of Income Tax having jurisdiction over the institution. […]

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