It is important to note that when registration is granted registration under 12A, it does not mean that section 80G is approved i.e. registration under section 12A will not provide automatic approval under section 80G. It has to be implemented separately. Section 80G applies only to charitable trusts or institutions. This does not apply to religious trusts or institutions whereas the exemption scheme u / s 12A applies to both charitable as well as religious trusts. Applications for registration under sections 12A and 80G can be applied simultaneously or they can also be applied separately.
If the trust is ready to apply both applications separately, then application for registration U / S 12A has to be applied first because registration U / S 12A has to apply for registration U / S 80G of Income Tax Act. Should be
Benefits of registration under Section 80G:
Section 80G 1961 of the Income Tax Act provides deduction by computing the total income in the hands of the payer. It provides deduction in respect of donations to certain funds, charitable institutions etc.
The person receiving or making the money gives the donation receipt, on the basis of which the donor is entitled to claim deduction, provided that the institution granted under section 80G of the Income Tax Act, 1961 is approved.
H. H. The Supreme Court of India in the case of Shri Ram Verma vs. Commissioner of Income Tax, held that kindness in donations is not eligible for deduction under section 80G.
Explanation 5 to Section 80G is as follows:
It has been declared that no deduction shall be allowed under this section in respect of any donation, unless such donation is of the amount.
Conditions to be satisfied for obtaining approval under Section 80G
Section Section 80G (5) sets out certain conditions to be satisfied for obtaining approval U / S (80G):
The institution should be established in India for charitable purpose.
If the institution or fund is receiving any income, then such income should not be liable to be included in its total income under the provisions of section 11 or 12 or section (23AA) or clause (23C) of section 10 .
If the institution or fund receives any income, profits and gains of business, the condition that such income shall not be liable to be included in its total income under the provisions of section 11 applies in relation to such income Does not occur if:
(A) The institution or fund maintains separate books of account in relation to such business;
(B) For the purposes of such business, donations made directly or indirectly by the institution or fund are not used
(C) The institution or fund issues to the person who gives the charity a certificate to the effect that he maintains separate books of account in respect of such business and that the donations received by him are used directly or indirectly. Will not be used for purposes of. Of such trade;
The instrument under which the institution is constituted shall have no provision for transfer or application of income or property for any purpose other than charitable purpose.
The institution should not be for the benefit of any particular religious community or caste.
The institute should keep regular accounts of its receipts and expenditure.
The institution should either be formed as a public charitable trust or a registered society or a U / S registered 8 of Companies Act '2013 or a university established by law, or any other educational institution recognized by the government established by law. A university is an institution affiliated to a university established by law, or funded wholly or partially by a government or local authority.
Documents required for 80G certificate registration
10G for registration U / S 80G registration;
Registration certificate and MOA / Trust deed (two copies - self verified by NGO chief);
NOC from landlord (where registered office is located);
PAN card copy of NGO;
Electricity bill / house tax receipt / water bill (photocopy);
Evidence and progress reports of welfare activities since inception or for the last 3 years;
Books of accounts, balance sheets and ITR (if any), since inception or last 3 years;
List of donors with their address and PAN;
List of Governing Body I Board of Trustee Members with their contact details; 10. Original RC and MOA / Trust Deed for verification;
Letter of authorization in favor of NGO factory;
I affidavit / undertake any other documents asked by Income Tax Department
Procedure for registration under Section 80G:
Rule 11AA of the Income Tax Rules, 1972 provides the procedure for obtaining approval under Section 80G.
Application Form No. 10G for approval of any institution which shall be verified by the person who is authorized to verify the return of income under section 140 as per the assessee
Form No. 10G will be furnished electronically, -
(i) Under digital signature, if the return of income is required to be furnished under digital signature; or
(ii) Through electronic verification code in case not covered under clause (i).
(3) Principal Director General of Income Tax (System) or Director General of Income Tax (System), as the case may be, verifying and verifying the number of forms