Registration under Section 80G and Section 12A of Income Tax Act, 1961

People give their contribution to the charitable funds, NGO, Institution for the well being of the society. Whatever will be the means of donation or contribution in the charitable activity but its main objective behind is to contribute to the economy, upliftment of weaker sections and back part of the country. Hence, the government has also announced so many schemes and tax benefits time to time for those people.

Section 80G deals with the deduction on the donation to the funds and charitable services. You can claim deduction on contribution made for charitable activities by fulfil the conditions prescribed under the Income Tax Act, 1961.

I would like to discuss:

ELIGIBLE CRITERIA 

Any person includes Individual, Company, firm and any other person can claim the deduction of Section 80G under Income Tax Act, 1961.

MODE OF CONTRIBUTION

The person can claim deduction by making contribution through any mode whether it is in cash/cheque/a draft.

Exception: You can made donation of upto Rs. 2,000 by cash but the donation made in cash of exceeding Rs. 2,000 will not be allowed as deduction. Therefore the donation above Rs. 2,000 can be made in any mode other than cash in order to allow the deduction of the sum of contribution.

Now, you all are thinking whether in kind contribution is eligible for deduction??

The answer of this query is No. The donation in kind such as food, medicines, material, clothes etc. will not be acceptable as donation for gaining tax benefit in form of deduction under Section 80G of Income Tax Act, 1961.

MAXIMUM LIMIT FOR DEDUCTION

The amount of deduction allowed on donation under Section 80G depends upon the funds or institute in which contribution is made. Deduction is available as certain percentage of contribution. The balance income after deductions would be taxable as per the slabs of Income tax slabs of the taxpayer.

The classifications of deductions available are as:

  1. Deduction without any Maximum Limit: 100% or 50% deduction of the amount donated.
  2. Deduction subject to Maximum Limit: 100% or 50% deduction of amount donated subject to maximum limit of 10% of *Adjusted Gross Total Income.

*Adjusted Gross Total Income means gross total income as reduced by any portion thereof 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.

Hey!! Keep a view, here are some other service details from our menu. You can sneak into them; it might be helpful for you!

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DETAILS AND DOCUMENTS REQUIRED FOR CLAIM DEDUCTION UNDER SECTION 80G

The person can claim deduction by filing of Income Tax Return with the following mentioned details alongwith their supporting documents:

  • Name of the Donee
  • Address of the Donee
  • PAN of the Donee
  • Amount of Contribution 
  • Proof of payment will be furnished
  • Stamped receipt issued by recipient trust
  • Any other details as required 

REGISTRATION OF CHARITABLE TRUST OR INSTITUTION UNDER SECTION 12A OF INCOME TAX ACT, 1961

NGO can be incorporated in many forms like Section 8 Company, Trusts, Society with the objective of charitable and religious services. Section 12A of the Income Tax Act, 1961 deals with registration of Non-Profit Organisation. It is one time registration which is granted by Income tax Department. It provides the exemption from the payment of Income Tax. 

Section 11, 12, 12A, 12AA and 13 of the Income Tax Act deals with the registration of the Charitable Trust or Institution and preconditions required for claiming and taking the advantage of taxation exemption in respect of income of charitable or religious trust/Institution. You can apply for the registration under Section 12A at any time after incorporation for enjoying the benefit of tax exemption. 

ELIGIBILITY FOR 12A REGISTRATION

  • It is necessary for the organisation falls under the definition of charitable purpose as defined under Income Tax Act, 1961.
  • Organization should not be Private and Family Trusts. It should be only for the benefit of public.

BENEFITS OF 12A REGISTRATION

PROCEDURE FOR OBTAINING 12A REGISTRATION

  1. The assessee shall file the application in online format to the Principle Commissioner or Commissioner before the expiry of one year from the creation of Trust or Institution.
  2. The commissioner on receipt of application may request to the applicant to submit the additional information or documents as required.
  3. Thereafter, the Commissioner shall passed order in writing for registering of the trust or Institution or its rejection within the six months from the end of the month in which application was received by commissioner and the copy of the same is also provided to the applicant thereafter the applicant will be eligible to claim the tax exemption.

DOCUMENTS REQUIRED FOR 12A REGISTRATION

  • A self-certified copy of the Instrument which was used to create the trust or Institution shall be submitted.
  • If the institution or trust have been created otherwise then the self-attested copy of evidencing the creation of the trust.
  • Self-certified of the registration received from applicable body like Registrar of Companies, Registrar of Society etc.
  • Self-certified copy of the documents which provide the evidence for the adoption or modification of the objective of the Entity shall be submitted.
  • Annual Financial Statements of the last three preceding Financial Year.
  • Note on the Activity conducted by the entity.
  • Self-certified copy of rejected order is also submitted if the application has been rejected earlier.

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