How to obtain 80G Registration?

Procuring an 80G registration for your non-profit organization can grant the donors a chance to avail tax deductions on donations. Additionally, obtaining 80G Certificate can also help increase the total count of donations your non- profit organization collect. This article all about 80G Registration and the advantages of holding an 80G Certificate. 

What is 80G Registration?

80G Registration or 80G Certificate is a certificate that allows the people making donations in your organization to avail tax deductions under Section 80G of Income Tax Act, 1961. Furthermore, religious charities or angel businesses are not generally issued an 80G Certificate. Moreover, gifts made to or trusts that are operating outside India or foreign trusts are not eligible for tax deductions.   

Benefits of 80G Registration

Getting 80G registration has many advantages which are discussed below in detail;

• Attract more donors: Obtaining 80G registration attract more donors as they get tax deductions under Section 80G of the Income Tax Act

• Tax benefits: Also, you are provided with various tax benefits when your institution is registered under Section 80G

• More access to funding: Furthermore, the chances for your trust to raise funds increases when you hold 80G registration

Deduction percentage under Section 80G

Deductions are provided to the taxpayers in some percentage as prescribed by relevant law. 

• Donations made to Prime minister relief fund is eligible for 100% deduction under section 80G without any upper limit
• Payments made to trusts like “Indira Gandhi memorial trust” is suitable for 50% deduction without any specified limit
• An approved institution, i.e. institutions encouraging and promoting family planning is eligible for 100% exemption under section 80G
• Any charitable trust that is included in the list is suitable for 50% deduction under section 80G

Documents required to claim deductions under Section 80G

The documents required to register under Section 80G of the Income Tax Act are as follows;

·        A copy of PAN Card (NGO)

·        Duly filled Form 10G

·        Trust Deed / MOU

·        Summary of welfare activities carried in the preceding 3 years

·        Balance sheet and books of accounts of the previous 3 years

·        List of donors along with their address and PAN

·        List of the governing board of trustee’s members with their contact details

·        Original Registration Certificate

For Proposed Registered office (Residential or commercial)

·        Any Utility bills

·        Scan copy of Rent agreement with NOC from owner

Mode of payment eligible for a tax deduction

Not all form of payment is qualified for claiming tax deductions under Section 80G. Furthermore, only a specified method of payment is allowed for the deductions which are as follows;

• Donations made in the form of gifts do not qualify for tax benefits
• Also, the donations made in kind will not help you with tax benefits during a disaster such as floods, earthquake
• Contributions deducted from salary can be claimed by providing the receipt received at  the time of payment
• Only donations made in cash or cheque qualifies for a tax deduction

Necessary Compliance requirements for 80G registration

The applicant of the 80G registration must comply with the following conditions;

• An application can only be made by registered societies, public charitable trusts, recognized educational institution or any institution funded by the Government
• The institution or trust applying for the certificate must be duly registered under the Societies Registration Act, 1860, Section 25 of the Companies Act or under any other relevant laws.
• Applicants of the certificate must not correspond to any religion-based or caste and creeds based activity.
• The donated funds received by these trust/ institution should only be used for charitable purposes
• The registered trust should not hold any income which is not exempted
• Institutions pursuing any other businesses side- by- side are required to maintain a separate book of accounts so that the received donations are not confused with savings of any other kind
• The applicant should manage an appropriate record of annual returns, accounting and bookkeeping before applying for the certificate.
• Finally, the recipient of the certificate must make sure that they renew their certificate regularly.

Procedure for 80G registration

You need to follow the following steps to obtain 80G Registration for your trust/ institution;

• You need to submit the application to the Commissioner of Income Tax along with necessary documents 
• Then, the Income Tax officials conduct an On-premise inspection after successful submission of application and documents,
• Furthermore, the department officials may ask for additional documents or evidence if they feel the need
• Finally, after successful verification of the premise and the documents, the 80G Certificate is granted to the institution

Issuance of 80G Certificate

After receiving the application, the Commissioner passes a written order upon successful verification of the application which would effectively register the trust under Section 80G of the Income-tax Act.

Additionally, the Commissioner may ask for further documents from the applicant if the need for the same is felt, or reject the application in the worst case. Moreover, the registration accorded to the trust is legitimate for a period of one-three years.

Conclusion

Obtaining 80G registrations is supportive to you in many ways; i.e. it helps attract more donors, grows trust and helps raise fundings from the Government. Also, it aids the people who make donations to your trust to avail some or all part of the donation made. Basically, it is a win-win situation. Corpbiz