80G certificate is advantageous for a firm to get immunity from paying income tax. A non-profit entity or charitable Trust registered under section 12A is eligible for tax exemption as per the provision of section 80G. You can easily understand by the example given below:-
If you have donated funds to a non-profit or charitable institution, you are entitled to receive a particular portion of the tax rebate. However, an upper limit is also acceptable for tax exclusion. If your donation has exceeded the 10% cap of the total gross income, in this case, the extra revenue that you get is not excluded from the tax.
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Numerous Advantages of 80G Registration Certificate
Attract domestic and foreign investors: An 80G certificate firm can easily attract investors from India and overseas for fundraising. Additionally, it is advantageous for an individual and firm to donate to NGOs with 80G certification to get up to 50% exemption in income tax payment.
Increase the credibility of your Trust or NGO: Register trusts, NGOs, or NPOs under 80G and make them government-certified separate independent bodies. This will eventually increase your goodwill, and you will be able to access a comprehensive source of funding and support from the government, private firms, and individuals.
The tax exclusion for lifelong: We have already mentioned that any firm, whether Trust, NPO, or NGO registered under section 80G, will receive a tax rebate or exclusion advantage for life.
Eligible for government aid or funding: A charitable firm or NGO with an 80G certificate can approach the government for funding. It becomes relatively easy for 80 G-certified Trusts and NGOs to get government aid and funding.
What Is the Eligibility of Getting Tax Concession Under Section 80G
It is not that every Trust and NGO is entitled to 80G certificate registration. There are specific terms and conditions that a respective firm needs to complete:
- Donating to the certified firms under the 80G section can qualify for tax concession.
- Foreigners or NRIs who donate to a certified NGO or Trust are also entitled to a tax rebate as per the 80G section.
- Donation to a single person is not entitled to avail tax concession under section 80G of the Income Tax Act, 1961
Who Cannot Receive Tax Concession Under Section 80G?
If the donation receipt contains the company name and owner, but the employee has made it from his income, he can claim a tax rebate under section 80G.
Donations spent on any political movement, party, or organization can eliminate the firm’s eligibility for a tax rebate. The firm will claim a tax concession for publishing, printing, endorsed brochures, and other promoting ingredients.
If an NGO is donating to a foreign organization, then it doesn’t hold the right to get a tax-saving advantage under section 80G
The reasons for 80G registration application rejection
The government can terminate your application for 80G certification, and the reasons are explained below points:-
The certified NGO/Section 8 Company/ Institution has no record of any charitable work.
Illegal money circulating: If the firm or NGO is involved in political party funding and receiving donations from foreign trusts, your 80G certification claim will be canceled.
Misuse of donation: If the grant is not used for the correct purpose and the Trust uses it for another motive, even within the organization’s premises, your eligibility for an 80G certificate will be prohibited. A comprehensive audit is compulsory.
No religious doings: If the charity promotes a particular religion, preaching, caste, and community, the department will instantly terminate the application.
No mixing of charity and business: If the organization is active in any commercial activity or business that has nothing to do with donation only, it is compulsory to keep business and charity split. Otherwise, your company will be disqualified for an 80G certificate.
What are the essential documents Required for an 80G Registration Certificate?
- Registration Certificate of the NGO/Trust/NPO
- MOA /Trust Deed
- No objection Certificate from the landowner where the registered office is located( if the office is in a rental property)
- PAN card of the Trust/NGO
- Utility bills ( Water, electricity, telephone) and house tax receipt
- Evidence and record of charity and philanthropy practiced by the organization
- Annual financial statement and balance sheet of NGO for last 3 continuous years
- Donators list with their PAN and address
- The member list of Trustees from a government body and their contact information ( If applicable)
- 12A registration certificate copy or print copy of notification allotted under section 10(23)or section 10(23C)
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Compliance Requirements of 80G Registration
The 80G certification applicant must follow the legal compliance mentioned below:
The firm/Trust/Institution applying for the 80G certificate must be registered under Trust/NGO and other non-profit organizations. To get the 80 G certificate, an organization must register under Section 25 of the Companies Act, Societies Registration Act, 1860, or any other applicable Act.
NGOs/Trusts must separate their business activity and charity events so that the donation amount is not amalgamated with other funding.
The charitable Trust must utilize donations for charity and benevolent and selfless development of underprivileged and needy people.
The certified NGO or benevolent entity should not accept any funding that exceeds the limit as per the tax rebate slab. If the amount surpasses the limit, then the firm doesn’t deserve a tax concession.
The organization should not indulge in religious, caste, race, or community-based prejudices.
The NGO/Trust must maintain correct yearly Income Tax Return Filing ( ITR), financial records, and bookkeeping before claiming for 80G registration.
An entity must renew the certificate on time to receive tax concession advantage without any intermittence.
Only a certified academic institution, public charitable firm, authorized society, or government-funded entity can apply for 80G certificate registration.