Guide to 80G Certificate & 80G Certificate

80G is a license that exempts an individual partly or fully from paying taxes if you have made donations to charitable trust/society or section 8 company that are registered u/s 80G to offer you exemptions from taxes. For e.g. A NGO registered under section 12 A, allows you to avail tax exemption under section 80G. There is however a maximum allowable deduction criteria. The criterion is if the aggregate of the amount you donate is more than 10% of the total gross income, then the excess amount will not be allowed for tax benefit. 80G certificates made its way into law book in the year 1967-68 and it continues to be an important tax-saving certificate.

Who can avail tax savings under 80G?

  • A person who makes a donation is entitled to avail tax exemption under 80 G.
  • Donations made to trust and organizations (who are registered under section 80G) only qualify for deduction u/s 80G.

Who cannot avail tax savings under section 80G?

  • If a donation is made to a foreign trust you cannot qualify for tax savings under section 80G.
  • If donations have been made too one or more political parties you cannot avail or claim deduction for such donations. Deductions cannot be claimed even for printing or publishing of brochures, flyers and pamphlets.
  • Donations by NRI if made to eligible NGOs also allowed for tax exemption under section 80G.
  • If donation is made from salary and if the donation receipt carries the name of the employer then employees can claim deduction under section 80G

Percentage of Deduction under Section 80G

  • Donations made to Prime minister relief fund is eligible for 100% deduction u/s 80G without any limit.
  • Deductions made to trusts like “Indira Gandhi memorial trust” is eligible for 50% deduction without any limit.
  • An approved institution i.e. institutions promoting and encouraging family planning is eligible for 100% exemption u/s 80G
  • Any charitable trust that falls under the list is eligible for 50% deduction u/s 80G.

Claim Deductions under 80G – Documents Required

  • Stamped receipt is required for claiming deduction under section 80G. The receipt of the donation has to be compulsorily be issued by the recipient trust. The receipt should comprise of:
    • Name, address & PAN number for the trust the donation was made to.
    • The name of the should not be mentioned
    • The amount donated should be mentioned in numeric as well as words.
    • Donations that can give 100% deduction – in such case form 58 from the NGO should also be asked for. Form 58 comprises the details of the amount that was authorized as well as the amount that was collected. Without presenting form 58, the deductions made for 100% claims will be rejected.
  •  Registration number of the trust under 80G
    • It is extremely important to mention the registration number issued by the income tax department under section 80G. The registration number should be printed on the receipt. The registration is issued by the income tax department for initially a period of 3 years only therefore the registration number, as well as the validity of the registration, should also be mentioned on the receipt.
      • The validity of the registration should be valid as of the date the receipt is issued.
    • Photocopy of the 80G certificate is required too in addition to the receipt.

Mode of Payments Eligible for Tax Deduction

  • Donations made as gifts do not qualify for tax exemption or benefits. During a disaster such as floods, earthquake the donations made in kind will not help you with tax benefits.
  • Donations only made in cash and cheque allowed for tax exemption.
  • Donations can be deducted from salary and donation receipt should be obtained on the name of the employer. This will allow employees to claim exemptions under section 80G.

80G Registration – Compliance Requirements

The applicant or recipient of the 80G registration must adhere to with the requirements specified below:

  • The application for 80G can only be made by a public charitable trust, registered charitable society, recognized educational institution or an institution funded by the Government.
  • The trust/institution applying for the certificate must be duly registered under the Societies Registration Act, 1860; or Section 25 of the Companies Act; or any other relevant Acts.
  • Applicants of the certificate must not represent any religion based or caste and creeds based activity.
  • The respective NGO should only utilize the donated funds for charitable and welfare purposes.
  • The registered trust/institution should not hold any income which is not exempted.
  • Entity’s pursuing any other businesses are required to maintain a separate account, so that the donations received are not confused with savings of any other kind.
  • The applicant should have maintained the appropriate annual returns, accounting and book keeping before applying for the certificate.
  • The 80G certified NGO must ensure the timely renewal of certificates, so as to receive the eligible tax benefits.

Process of Obtaining 80G Registration

Registration under 80G will be examined by the Commissioner of Income Tax after receiving an application from the applicant. The application should be accompanied by the following documents:

  1. Registration Certificate
  2. MOA /Trust Deed
  3. NOC from the proprietor of the land where the registered office is situated.
  4. Copy of the Pan Card of the Trust/Institution.
  5. Copy of electricity bill, house tax receipt, or water bill
  6. Proof of welfare activities pursued
  7. Progress Report since the foundation of the NGO or for the previous 3 years
  8. The statement of accounts and balance sheet since the foundation/previous 3 years
  9. List of contributors along with their address and PAN.
  10. List of governing body of trustees with their contact details
  11. Copy of 12A registration or copy of notification issued under section 10(23)or section 10(23C).
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