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 to receive tax exemption as per the provision of section 80G. You can easily understand by an example given below:-
Suppose you have donated funds to a non-profit or charitable institution, then you are entitled to receive a particular portion of the tax rebate. But there is also an upper limit 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: The firm with an 80G certificate 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: Trust, NGO, or NPOs registered under 80G; make them government-certified separate independent body. That eventually increases your goodwill, and you will be able to get 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 tax rebate or exclusion advantage for life long.
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 Trusts and NGO are entitled to 80G certificate registration. There are specific terms and condition; a respective firm need to complete:
- If you donate to the certified firms under the 80G section, you can qualify for tax concession.
- Foreigners or NRI donation to a certified NGO and Trust is also entitled to a tax rebate as per 80G section.
- Donation to a single person is not entitled to avail tax concession under section 80G of 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.
The donations spent on any political movement, party, and organization can eliminate the firm’s eligibility to get a tax rebate. The firm will claim tax concession for publishing, print, endorse 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
Government can terminate your application for 80G certification, and the reasons are explained in 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 getting donations from foreign trusts, your 80G certification claim will get canceled.
Misuse of donation: If the grant is not used for the correct purpose and Trust uses it for another motive even within the organization premise, 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 or a specific caste and community, the department would instantly terminate the application.
No mixing of charity and business: If the organization is active in any commercial activity or business with nothing to do with donation only, it is compulsory to keep business and charity split. Otherwise, your company becomes disqualified for an 80G certificate.
What Are The Essential Documents Compulsory for 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 underneath:
The firm/Trust/Institution applying for 80G certificate must be registered under Trust/NGO and other non-profit organizations. An organization must register under Section 25 of the Companies Act, Societies Registration Act, 1860, or any other applicable Act to get the 80G certificate.
NGO/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 donation money for charity, benevolent and selfless development of underprivileged and needy people.
The certified NGO or benevolent entity should not accept any exceeded funding as per the tax rebate slab. If the amount surpasses the limit, then the firm doesn’t deserve to get a tax concession.
The organization should not indulge in religious, case, race, community base 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 get renewal of the certificate on time to receive tax concession advantage without any intermittence.
Only a certified academic institution, public charitable firm, authorized society, and government-funded entity is allowed to apply for 80G certificate registration.