Sec 269 ST
Shiraz Ahmad (51 Points)
04 May 2020
Is Sec 269 ST applicable on Charitable Organizations receiving donations in cash?
4 Replies
Shiraz Ahmad
(51 Points)
Replied 04 May 2020
Does it mean, an organisation is allowed to receive Rs 5 Lacs Cash Donation, say for example. Just the donor will be denied full deduction ?
Shivam RC
(Student)
(23683 Points)
Replied 04 May 2020
Yes @ Shiraz Ahmad Sir...
The Organisation can accept CASH DONATION but the donor will be denied for Deduction under Section 80G if the CASH DONATION Amount exceeds Rs. 2,000.
The Organisation can accept CASH DONATION but the donor will be denied for Deduction under Section 80G if the CASH DONATION Amount exceeds Rs. 2,000.
Asha Kanta Sharma
(Manager - Finance & Accounts)
(36355 Points)
Replied 04 May 2020
Donation are often of two types: Anonymous or non anonymous
In case of Anonymous donation, just in case of public trust , if the donation is in cash and exceeds Rs. limit as prescribed under section 115BBC; then it's taxable @ 30% u/s 115BBC
Further, if it's religious trust, then it's not taxable albeit the quantity received in cash exceeds basic exemption limit under section 115BBC.
Section 269ST
The Finance Act 2017 has inserted a replacement section 269ST within the tax Law to limit a person receiving Rs. 2 lakh or more in cash from a person during a aggregate in a day or in respect of one transaction or in respect of transactions concerning one even or occasion from an individual . The contravention of such provision shall attract penalty under new section 271DA i.e. like the quantity so received by the recipient.
Therefore, just in case of receipt of money donations by a trust (may be charitable or religious) if donations are found received in contravention of section 269ST then relevant trust shall be susceptible to attract penal consequences. Thus, a trust must be cautions that cash donations received by it shouldn't fall into the ambit of section 269ST detailed above.
For example, a temple trust receiving cash amount of Rs. 3,50,000 from a donor towards ‘Pran-Pratishta’ or ‘Prasadi’ or ‘Pooja’ program are often said to be non-compliant for the needs of section 269ST.
Sec 80G vs Cash Donation and charitable trust:
It is only a charitable trust who can get registered under section 80G and supply receipts to the donors making them eligible to say deduction under section 80G (in computation of donor’s total income). Thus, religious trusts aren't eligible for section 80G registration.
The Finance Act 2017 has amended the provisions of section 80G (5D) wef AY 2018-19 providing that “No deductions shall be allowed under this section in respect of donation of any sum exceeding two thousand rupees unless such sum is paid by any mode aside from cash.” This limit before revision was rupees ten thousand. Thus an individual donating quite Rs. 2,000/- in cash on or after 01.04.2017 shall not be entitled to say advantage of such deduction under section 80G.
Just to summarize:
There is no specific restriction for a trust to receive donation in cash…however it needs to take care of section 269 ST non-compliance if donation in cash is received exceeding Rs. 2 lakhs
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