Section 80g of income tax act
80g is undoubtedly a special section of Income Tax Act, 1961 for non government organizations. Day by day, in every sector, rules are getting modified from the side of government whether it is banking sector, ngo, stock market, cryptocurrency or any sort of financial investment. This ngo concept will continue for all those philanthropists who wish to execute charitable activities under one umbrella. In foreign countries, generally everyone is liable to pay 40 percent tax. It is mandatory for all the citizens to take health, medical and life insurance policies both for their families as well as pets. Here is India, situation is different as our country is still a developing nation. The concept of tax dates back to thousand years when monarchy rule existed. As time passed by, the kingship rule was gone, in various parts of the world, Britishers used to rule. When the rule of Britishers was overthrown in all parts of the world, new countries and their constitutions were established. In India, Income Tax Act with its various sections was implemented in 1961. As a whole, we can say that the ngo registered under any act shall not miss section 80g or 12a registration. The main cause behind 80g is to persuade more and more donors to donate to those ngos having 80g certification. To get this tax exemption, stamped and signed receipt should be issued for the donation issued by the the non government organization. Simultaneously, 12a registration gives life tax exemption to ngos. After covid, the system of 12a and 80g deduction has been centralized. Earlier, the ngo representatives had to approach their local income tax regions of their states for follow up. Now, this centralized system is saving time and energy of most people. One is supposed to enclose bank statements, bye-laws, last 3 year balance sheets, bills or invoices in the name of ngo, photographs of events of the ngo for 12a registration or 80g registration.
12a or 80g of income tax act-
From ngo funding point of view, it is also important as the various ngos who apply for corporate or government funding, they check the certifications of 12a and 80g and in majority of the cases, these certifications are mandatory. As ministries and corporates also pay taxes, they are definitely going to shortlist those ngos who are having valid 12a and 80g certifications. By doing so and issuing them sanction letters, they will also get tax benefits. Nowdays, section 80g and section 12a is being given in provisional manner for 3 years, thereafter one has to apply for its renewal. Time to time, income tax is issuing new notifications in order to keep a track on those people who under the garb of ngos are working in unauthentic manner.
From this financial year 2022-2023, there is a new form named as Form 10BD which is to be filed before 31st May, 2022. It is for those ngos who issue 80g receipts to donors and those donor claim tax exemptions via these receipts. The details required in the form are name of donor, address of donor, nature of donation, mode of payment, donation amount, pan number of donor and section under which donation was received. As soon as the Form 10BD is filed by the charitable organization, they are required to download and issue certificate of donation in Form 10BE. The Form 10BE shall include details like Name of the charitable organization, pan, address, approval number under section 80g and section 35(1) along with the details of the donor and their donations.