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Certification under 80g

amulya_r8 (Business) (197 Points)

22 April 2010

What is the procedure to apply for certification under sec 80g fro a trust engaged in Charitable purpose?

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Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 22 April 2010

Dear Amulya,

REGISTRATION UNDER SECTION 80G

02 If an NGO gets itself registered under section 80G then the person or the organisation making a donation to the NGO will get a deduction of 50% from his/its taxable income. The NGO has to apply in Form No. 10G As per Annexure - 29 to the Commissioner of Income Tax for such registration. Normally this approval is granted for 2-3 years.

DOCUMENTS TO BE FILLED WITH FORM 10G

03 The application form should be sent in triplicate to the Commissioner of Income Tax alongwith the following documents :

i) copy of income tax registration certificate.
ii) detail of activities since its inception or last three years whichever is less
iii) copies of audited accounts of the institution/NGO since its inception or last 3 years whichever is less.

CONDITIONS TO BE FULFILLED UNDER SECTION 80G

04 For approval under section 80G the following conditions are to be fulfilled :

i) the NGO should not have any income which are not exempted, such as business income. If, 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.

ii) the bylaws or objectives of the NGOs should not contain any provision for spending the income or assets of the NGO for purposes other than charitable.

iii) the NGO is not working for the benefit of particular religious community or caste.

iv) the NGO maintains regular accounts of its receipts & expenditures.

v) the 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.

EXTENT OF BENEFIT

05 There is ceiling limit upto which the benefit is allowable to the donor. 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.

In other words, while computing the total income of an assessee and for arriving at the deductible amount under section 80G, first the aggregate of the sums donated has to be found out. Then 50 per cent of such donations has to be found out and it should be limited to 10 per cent of the gross total income. If such amount is more than 10 per cent of the gross total income, the excess will have to be ignored.

IILUSTRATION OF BENEFITS UNDER SECTION 80G

06 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.

regards,

ratan

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amulya_r8 (Business) (197 Points)
Replied 22 April 2010

Dear Mr.Ratan,

Thanks for the information.?What do you mean by Copy of Income Tax Registration Certificate?Where can the Form 10g obtained?Do you have any such smaple application sent ?