80G Registration for NGOs in India – A Comprehensive Guide
In India, non-governmental organizations (NGOs) play a crucial role in addressing various social issues, from education and healthcare to poverty alleviation and environmental conservation. To encourage donations and financial support for these organizations, the government provides tax benefits to both donors and NGOs through Section 80G of the Income Tax Act, 1961. In this blog, we will explore the intricacies of 80G registration for NGOs, its benefits, eligibility criteria, and the application process.
What is Section 80G?
Section 80G is a provision under the Income Tax Act that allows donors to claim a deduction for the amount donated to registered NGOs. It encourages philanthropy by providing tax benefits to individuals and organizations contributing to charitable causes. To avail these benefits, NGOs must obtain 80G registration from the Income Tax Department.
Benefits of 80G Registration for NGOs
Here are the benefits of having 80G registration for NGOs:
- Tax Deduction for Donors: Donors can claim a deduction on their taxable income for the amount donated to NGOs registered under Section 80G. This encourages individuals and companies to contribute to social causes.
- Credibility: 80G registration adds credibility to an NGO’s operations, as it signifies that the organization has met the necessary compliance standards and is eligible to receive tax-deductible donations.
- Increased Fundraising: 80G Registered NGOs often find it easier to attract donors, as individuals and businesses are more likely to support organizations that offer tax benefits.
Eligibility Criteria for 80G Registration for NGO
To be eligible for 80G registration, NGOs must meet certain criteria:
- Legal Entity: The NGO must be a legally constituted organization, either as a trust, society, or section 8 company. Once an NGO is registered, it is eligible to apply for 80G registration from Income Tax Department.
- Non-Profit Status: The primary objective of the NGO should be charitable, and it should not exist for profit.
- Registration: The NGO should be registered under the relevant laws, such as the Indian Trusts Act, 1882, the Societies Registration Act, 1860, or the Companies Act, 2013.
- Compliance: The NGO must comply with all legal and financial regulations, including filing annual returns and maintaining proper accounts.
- No Discrimination: The NGO should not discriminate on the basis of religion, race, caste, or gender.
Application Process for 80G Registration
Obtaining 80G registration for an NGO involves a systematic application process. Here are the steps to follow:
1. Preparing Documentation:
- PAN Card: Obtain a Permanent Account Number (PAN) card for the NGO.
- Registration Certificate: Provide a copy of the registration certificate under the relevant law (Trust, Society, or Section 8 Company).
- Memorandum of Association (MOA) and Articles of Association (AOA): If applicable, submit copies of the MOA and AOA (in case of Section 8 NGOs). For Trust or Society, a trust deed or society deed is required for the application of 80G registration.
- Audited Financial Statements: Provide the NGO’s audited financial statements for the last three years (if applicable). Newly registered NGOs are also eligible for 80G registration as the primary registration is provided on a “Provisional” basis by the Income Tax department which is valid upto 3 years.
- Annual Reports: Include copies of the NGO’s annual reports.
- Details of Activities: Outline the charitable activities the NGO is involved in.
- Bank Account Details: Furnish the bank account details of the NGO.
2. Form 10G:
- Download Form 10G from the Income Tax Department’s website.
- Fill in the form with accurate information.
- Attach all required documents, including those mentioned in step 1.
- Submit the completed Form 10G to the jurisdictional Income Tax Officer (ITO).
- The ITO may conduct a field inspection of the NGO to verify the information provided.
- This may involve visiting the NGO’s premises and assessing its activities.
4. Approval or Rejection:
- The Income Tax Department will review the application and supporting documents.
- If all requirements are met, the NGO will receive 80G registration.
- If the application is incomplete or does not meet the criteria, it may be rejected.
5. Issuance of Certificate:
- Upon approval, the Income Tax Department will issue a provisional 80G certificate to the NGO.
- This certificate specifies the validity period of the registration, which is typically for valid for 3 years.
6. Promoting the 80G Registration:
- Once registered, the NGO should inform potential donors about its 80G registration status to attract tax-deductible donations.
Renewal of 80G Registration
80G registration is not permanent and needs to be renewed periodically. NGOs must reapply for renewal before the expiry of their current registration. The renewal process is similar to the initial application process, requiring updated documents and compliance with all regulations.
Section 80G registration is a valuable tool for NGOs in India to attract donors and promote charitable contributions. NGOs that meet the eligibility criteria and follow the application process diligently can enjoy the benefits of tax-deductible donations, increased credibility, and improved fundraising opportunities. However, it is essential for NGOs to maintain their compliance and renew their registration as required to continue enjoying these benefits and making a positive impact on society.