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WHAT IS 80G TAX

Section 80G of the Income Tax Act in India provides deductions for donations made to specified funds and charitable institutions. If you make donations to organizations covered under this section, you can claim a deduction from your taxable income.

Here are the key points regarding Section 80G:

1. Eligibility: To be eligible for deductions under Section 80G, the organization or fund to which you donate must be registered under the Income Tax Act as a charitable institution or trust. Not all charitable organizations qualify, so it's essential to check the registration status.
2. Deduction Limits: The amount you can claim as a deduction depends on the type of organization and the percentage of the donation that qualifies for deduction. The donation may be eligible for either a 100% or 50% deduction, depending on the nature of the charitable institution.
3. Limit on Cash Donations: The Income Tax Act imposes restrictions on the amount of cash donations that qualify for deductions. To encourage digital transactions and transparency, cash donations exceeding a specified limit are not eligible for deductions under Section 80G.
4. Mode of Payment: To claim deductions under Section 80G, it is advisable to make donations through non-cash modes such as cheques, bank drafts, or electronic transfers. This ensures proper documentation for tax purposes.
5. Submission of Receipts: Donors should obtain a receipt for the donation made to the charitable institution. The receipt should include details such as the name and address of the organization, the registration number under Section 80G, the amount donated, and the donor's details.
6. Verification: Before making a donation, it is crucial to verify whether the charitable institution is registered under Section 80G. The Income Tax Department periodically updates the list of eligible institutions, and donations to unregistered entities may not qualify for deductions.
7. Filing Income Tax Returns: To avail of the deduction, you must declare the donation amount in your income tax return and submit the necessary documents, including the receipt obtained from the charitable institution.

Types of Deductions under Section 80G:

1. 100% Deduction: Donations to certain funds and charitable institutions are eligible for a 100% deduction. This means that the entire donated amount can be deducted from your taxable income. However, there may be a cap on the maximum limit for such deductions.
2. 50% Deduction: Donations made to other eligible charitable organizations may qualify for a 50% deduction. Again, there might be a limit on the maximum amount eligible for deduction.

Conditions and Restrictions:

1. Mode of Payment: To claim deductions, it is recommended to make donations through non-cash modes. Donations made in cash beyond a certain limit (as specified by the government) may not be eligible for deductions.
2. Approved Organizations: Only donations made to institutions that have received approval from the Income Tax Department under Section 80G are eligible for deductions. The approval is usually granted for a specific period, and donors should check the validity of the institution's approval.
3. Limits on Deductions: While the percentage of deduction varies, there might also be an overall limit on the total amount eligible for deduction under Section 80G. This limit is subject to changes in tax laws and regulations.
4. Foreign Contributions: Donations to certain foreign institutions may also be eligible for deductions under Section 80G, subject to specific conditions and approvals.
5. Prescribed Forms: While filing tax returns, donors need to provide details of the donation, including the name and address of the charitable institution, its registration number, and the amount donated. The receipt obtained from the institution serves as supporting documentation.

Verification of Charitable Institutions:

Before making a donation, it's crucial to verify whether the charitable institution is registered under Section 80G. The Income Tax Department maintains a list of approved institutions, and this list is periodically updated. Donors can check the department's website or refer to the latest list to ensure the eligibility of the institution.

Claiming Deductions in Income Tax Returns:

When filing income tax returns, donors need to declare the donation amount and provide details of the charitable institution. This information should be accurately filled in the prescribed sections of the income tax return form.

It's essential to stay informed about any changes in tax laws, as these can impact the eligibility criteria and deductions under Section 80G. Consulting with a tax professional or referring to the latest guidelines from the tax authorities is advisable for accurate and up-to-date information.

WHAT IS THE ELIGIBILITY FOR 80G

To be eligible for deductions under Section 80G of the Income Tax Act in India, certain conditions and criteria must be met. Here are the key eligibility factors:

1. Registration: The charitable institution or fund to which you make a donation must be registered under Section 80G of the Income Tax Act. The registration is granted by the Income Tax Department, and the institution must fulfill specific criteria to qualify. Donors should verify the registration status of the organization before making a donation.
2. Type of Organization: Different types of charitable organizations may qualify for deductions under Section 80G. Generally, donations to funds such as the Prime Minister's National Relief Fund, the National Defence Fund, and specific approved charitable institutions are eligible for deductions. However, not all charitable organizations are covered, so it's essential to check the specific list provided by the Income Tax Department.
3. Validity of Approval: The approval granted to charitable institutions under Section 80G is typically valid for a specific period. Donors should ensure that the approval is current and has not expired. The Income Tax Department periodically updates and publishes the list of approved institutions.
4. Mode of Donation: To claim deductions, it is advisable to make donations through non-cash modes such as cheques, bank drafts, or electronic transfers. While there is no restriction on the mode of payment, donations in cash beyond a specified limit may not be eligible for deductions.
5. Compliance with Conditions: Charitable institutions must comply with the conditions specified by the Income Tax Department to maintain their eligibility for Section 80G approvals. Failure to meet these conditions may result in the withdrawal of approval.
6. Receipts and Documentation: Donors should obtain a receipt from the charitable institution for the donation made. The receipt should include details such as the name and address of the organization, its registration number under Section 80G, the amount donated, and the donor's details. This receipt serves as crucial documentation when claiming deductions in income tax returns.
7. Foreign Contributions: In some cases, donations to foreign charitable institutions may also be eligible for deductions under Section 80G, subject to specific conditions and approvals.

DEDUCTION LIMITS

The deduction limits under Section 80G of the Income Tax Act in India vary depending on the type of charitable institution or fund to which the donation is made. The deduction is calculated as a percentage of the donated amount, and the limits may also be subject to a maximum cap. Here are the general guidelines:

1. 100% Deduction: Donations made to specified funds and charitable institutions may qualify for a 100% deduction. This means that the entire donated amount can be deducted from the donor's taxable income. The deduction is generally available for contributions to funds like the Prime Minister's National Relief Fund (PMNRF), the National Defence Fund, and certain other approved institutions.
2. 50% Deduction: For donations made to other eligible charitable institutions, the deduction is typically limited to 50% of the donated amount. This means that only half of the donated sum is eligible for deduction from the donor's taxable income.
3. Maximum Deduction: While there may not be a specific maximum limit for 100% deductions, there could be a cap on the total deduction available for 50% donations. For instance, if the total taxable income is Rs. 10 lakhs, and the donor makes a donation of Rs. 1 lakh to a 50% eligible institution, the maximum deduction would be 50% of Rs. 1 lakh, i.e., Rs. 50,000.
4. Cash Donation Limit: The Income Tax Act imposes restrictions on the amount of cash donations that qualify for deductions under Section 80G. Donors are encouraged to make contributions through non-cash modes such as cheques, bank drafts, or electronic transfers. Cash donations beyond a specified limit may not be eligible for deductions.

MODE OF PAYMENT

The mode of payment for donations under Section 80G of the Income Tax Act in India is an important consideration, as the government encourages non-cash transactions for transparency and traceability. Here are some key points regarding the mode of payment:

1. Non-Cash Modes: To claim deductions under Section 80G, it is advisable to make donations through non-cash modes such as:

• Cheques: Donors can issue a cheque in favor of the charitable institution or fund to which they are making a donation.
• Bank Drafts: Bank drafts are a secure form of payment that can be used for making donations to eligible institutions.
• Electronic Transfers: Donors can transfer funds electronically to the bank account of the charitable institution. Online banking and electronic payment methods facilitate this process.

1. Limit on Cash Donations: The Income Tax Act imposes restrictions on the amount of cash donations that qualify for deductions under Section 80G. As of my last knowledge update in January 2022, the limit on cash donations eligible for deduction was Rs. 2,000. This means that if a donor makes a cash donation of Rs. 2,000 or more, only the amount up to Rs. 2,000 would be eligible for deduction.
2. Documentation: Regardless of the mode of payment, donors should obtain a receipt from the charitable institution for the donation made. The receipt should include details such as the name and address of the organization, its registration number under Section 80G, the amount donated, and the donor's details. This receipt serves as crucial documentation when claiming deductions in income tax returns.
3. Bank Statements: In addition to the receipt from the charitable institution, it's advisable for donors to retain bank statements or other transaction records that provide evidence of the donation. This documentation can be useful in case of any future verification by tax authorities.
4. Digital Payment Platforms: With the increasing emphasis on digital transactions, donors can also use digital payment platforms to make contributions. Many charitable organizations provide options for online donations through their websites or third-party platforms.

FILLING INCOME TAX RETURNS

Filing income tax returns in India involves providing accurate information about your income, deductions, and other financial details to the tax authorities. Here are the general steps for filing income tax returns:

1. Choose the Right ITR Form:

• Select the appropriate Income Tax Return (ITR) form based on your sources of income, residential status, and other relevant factors. Commonly used forms include ITR-1 (Sahaj), ITR-2, ITR-3, etc.
• Ensure that you are using the latest version of the ITR form available on the official website of the Income Tax Department.

1. Gather Necessary Documents:

• Collect all relevant documents such as Form 16 (if you are a salaried individual), salary slips, bank statements, investment proofs, and details of deductions.

1. Compute Total Income:

• Calculate your total income by adding up income from all sources, including salary, business or profession, house property, capital gains, and other income.

1. Calculate Taxable Income:

• Deduct eligible exemptions, deductions, and rebates from your total income to arrive at the taxable income. This may include deductions under sections such as 80C, 80D, 80G, etc.

1. Pay Any Outstanding Tax:

• If you have any tax liability after deductions, ensure that you pay the outstanding tax before filing your return. Use the Challan 280 to pay self-assessment tax, if applicable.

1. Fill in the ITR Form:

• Fill in the ITR form with accurate details. Provide information about your personal details, income, deductions, and tax payments.
• Ensure that you report all sources of income, including interest, rental income, and other earnings.

1. Verify and Generate XML:

• Verify the information filled in the ITR form and generate the XML file. This file will be used for uploading on the Income Tax Department's e-filing portal.

1. Log in to the Income Tax Department's Portal:

• Visit the official Income Tax e-filing portal and log in or register if you are a new user.

1. Upload XML File:

• Upload the generated XML file on the portal. Some forms allow direct online filling, while others may require manual upload.

1. Verify Return (ITR-V):

• After successfully uploading the XML file, an acknowledgment form known as ITR-V (Income Tax Return-Verification) will be generated. Download and print the ITR-V.
• Sign the ITR-V and send it to the Centralized Processing Centre (CPC) in Bengaluru within 120 days of filing. Alternatively, you can e-verify your return using Aadhaar OTP, net banking, or other electronic verification methods.

1. Verification Status:

• Check the status of your return after submitting the ITR-V to ensure that it has been successfully verified.

DOCUMENTS REQUIRED FOR 80G

1. Receipt from Charitable Institution:

• Obtain a receipt from the charitable institution or fund to which you have made the donation. The receipt should include details such as the name and address of the organization, its registration number under Section 80G, the amount donated, and the date of the donation.

1. PAN (Permanent Account Number) of the Charitable Institution:

• Note down the PAN of the charitable institution to which you have made the donation. This information is often required when providing details in your income tax return.

1. Details of the Donation:

• Keep records of the donation amount, date of donation, and mode of payment (cheque, bank draft, online transfer, etc.).

1. Bank Statements or Proof of Payment:

• Retain bank statements or transaction records that provide evidence of the donation. This documentation can be useful in case of any future verification by tax authorities.

1. Certificate of Registration under Section 80G:

• Check whether the charitable institution is registered under Section 80G. You may request a copy of the registration certificate from the institution.

1. Form 16A (TDS Certificate):

• If applicable, obtain Form 16A from the charitable institution. This form is a TDS (Tax Deducted at Source) certificate and is relevant if the institution has deducted TDS on the donation amount.

1. Donor's PAN (Permanent Account Number):

• Ensure that your PAN is correctly mentioned on the donation receipt issued by the charitable institution.

1. Validity of Approval:

• Verify the validity period of the institution's approval under Section 80G. Approval is typically granted for a specific period, and donations made during that period are eligible for deductions.

1. Details for Filing Income Tax Return:

• Keep the necessary details handy for filling in your income tax return. This includes the amount of donation, PAN of the charitable institution, and other relevant information.

1. Communication or Correspondence:

• Preserve any communication or correspondence (emails, letters, etc.) exchanged with the charitable institution regarding the donation.

WHAT IS 12A

Section 12A of the Income Tax Act in India pertains to the registration of trusts and certain institutions for availing tax exemptions. This section deals with the registration process that enables these entities to claim exemptions on their income, making the income they generate exempt from taxation, subject to certain conditions.

Key points related to Section 12A include:

1. Applicability: Section 12A applies to trusts, societies, or other non-profit entities that are established for charitable or religious purposes. Such entities may include charitable trusts, educational institutions, medical institutions, religious organizations, etc.
2. Registration Requirement: To avail tax exemptions under Sections 11 and 12 of the Income Tax Act, a trust or institution must obtain registration under Section 12A. This registration is a prerequisite for claiming tax benefits.
3. Exemption under Sections 11 and 12: Once registered under Section 12A, the income of the trust or institution may be exempt from taxation under Sections 11 and 12 of the Income Tax Act. Section 11 provides exemptions on income derived from property held for charitable or religious purposes, while Section 12 deals with exemptions for income of trusts or institutions relating to religious or charitable activities.
4. Procedure for Registration:

• The entity seeking registration under Section 12A must apply to the Commissioner of Income Tax (Exemptions) in the prescribed form.
• The application should be accompanied by relevant documents, including the trust deed, memorandum of association, articles of association (if applicable), and details of activities carried out by the entity.
• The Commissioner may grant registration if satisfied with the charitable or religious nature of the entity and its compliance with the provisions of the Act.

1. Validity Period: The registration under Section 12A is generally valid indefinitely unless it is canceled by the tax authorities for reasons such as non-compliance with the conditions specified in the Act.
2. Impact on Donors: Donors often look for Section 12A registration when making contributions to ensure that the entity is eligible for tax exemptions. Donations made to entities registered under Section 12A are eligible for deduction under Section 80G.

WHAT IS THE APPLICABILITY

Section 12A of the Income Tax Act in India is applicable to trusts, institutions, or entities that are established for charitable or religious purposes. The primary purpose of this section is to provide a mechanism for such entities to obtain registration, which is a prerequisite for availing tax exemptions on their income.

Here are key points regarding the applicability of Section 12A:

1. Charitable or Religious Purpose: The section applies to trusts or institutions that are established for charitable or religious purposes. These purposes include relief of the poor, education, medical relief, preservation of environment, advancement of any other object of general public utility, or any other purpose that may be considered charitable.
2. Trusts and Institutions: The section is relevant for various types of entities, including charitable trusts, religious institutions, educational institutions, medical institutions, and other non-profit organizations that operate for the benefit of the public.
3. Tax Exemption Requirements: Entities seeking tax exemptions on their income under Sections 11 and 12 of the Income Tax Act must first obtain registration under Section 12A. Sections 11 and 12 provide exemptions for income derived from property held for charitable or religious purposes and income of trusts or institutions engaged in charitable or religious activities.
4. Application for Registration: To avail of the benefits under Section 12A, the concerned trust or institution must apply to the Commissioner of Income Tax (Exemptions) in the prescribed form. The application should include details such as the trust deed, memorandum of association, articles of association (if applicable), and information about the activities carried out by the entity.
5. Validity and Compliance: Once registered, the entity typically holds the registration indefinitely, unless it is cancelled by the tax authorities for reasons such as non-compliance with the conditions specified in the Act. Registered entities are expected to continue their activities in accordance with the prescribed charitable or religious objectives.
6. Impact on Donors: Donors often prefer contributing to entities that have obtained Section 12A registration as it assures them that the entity is eligible for tax exemptions. Donations made to such registered entities are eligible for deduction under Section 80G.

WHAT IS REGISTRATION REQUIREMENT

Under Section 12A of the Income Tax Act in India, certain trusts, institutions, or entities must obtain registration to avail tax exemptions on their income. Here are the key points related to the registration requirement:

1. Eligibility Criteria: Entities seeking tax exemptions under Sections 11 and 12 of the Income Tax Act must first obtain registration under Section 12A. These entities include trusts, institutions, or organizations established for charitable or religious purposes.
2. Application Process:

• The concerned trust or institution needs to apply for registration to the Commissioner of Income Tax (Exemptions) in the prescribed form.
• The application should be accompanied by relevant documents, which may include the trust deed, memorandum of association, articles of association (if applicable), and details of the activities carried out by the entity.

1. Verification and Approval:

• The Commissioner of Income Tax (Exemptions) will review the application and supporting documents.
• If satisfied with the charitable or religious nature of the entity and its compliance with the provisions of the Income Tax Act, the Commissioner may grant registration.

1. Validity Period:

• The registration granted under Section 12A is generally valid indefinitely unless it is cancelled by the tax authorities for reasons such as non-compliance with the conditions specified in the Act.
• Entities should, however, ensure ongoing compliance with the prescribed activities and conditions to maintain their registration status.

1. Cancellation of Registration:

• The Commissioner has the authority to cancel the registration if the entity ceases to exist, ceases to carry on charitable or religious activities, or fails to comply with other specified conditions.
• Entities may also voluntarily surrender their registration if they no longer wish to avail tax exemptions.

1. Impact on Tax Exemptions:

• Registration under Section 12A is a prerequisite for claiming tax benefits under Sections 11 and 12 of the Income Tax Act.
• Once registered, the entity's income derived from property held for charitable or religious purposes or income related to charitable or religious activities may be exempt from taxation, subject to certain conditions.

1. Donor Confidence:

• Donors often prefer contributing to entities that have obtained Section 12A registration, as it assures them that the entity is eligible for tax exemptions. Donations made to such registered entities are eligible for deduction under Section 80G.

PROCEDURE OF REGISTRATION

The procedure for registration under Section 12A of the Income Tax Act in India involves applying to the Commissioner of Income Tax (Exemptions) in the prescribed manner. Here is a general overview of the procedure for obtaining registration:

Step-by-Step Procedure:

1. Prepare Necessary Documents:

• Collect and prepare all necessary documents, including the trust deed, memorandum of association, articles of association (if applicable), and details of the activities carried out by the entity.
• Ensure that the trust deed or other governing document clearly outlines the charitable or religious objectives of the entity.

1. Fill Out the Application Form:

• Obtain the prescribed application form for registration under Section 12A from the Income Tax Department's official website or the local tax office.
• Complete the application form with accurate and comprehensive details about the entity, its objectives, and the activities it undertakes.

1. Attach Supporting Documents:

• Attach all required supporting documents to the application form. Commonly required documents include:

• Trust deed or governing document.
• Memorandum of association and articles of association.
• Details of trustees or key office bearers.
• Audited financial statements.
• PAN of the entity.
• Proof of address.

1. Submit the Application:

• Submit the completed application form along with supporting documents to the office of the Commissioner of Income Tax (Exemptions) having jurisdiction over the area where the entity is registered.

1. Verification by Tax Authorities:

• The tax authorities will review the application and supporting documents to verify the charitable or religious nature of the entity.
• The authorities may seek additional information or clarification during the verification process.

1. Granting of Registration:

• If satisfied with the charitable or religious activities and compliance with the provisions of the Income Tax Act, the Commissioner of Income Tax (Exemptions) will grant registration under Section 12A.
• The registration is typically granted for an indefinite period, unless canceled by the tax authorities for specific reasons.

1. Receipt of Registration Certificate:

• Once the registration is approved, the tax authorities will issue a registration certificate under Section 12A to the entity. This certificate will specify the registration number and the period of validity.

1. Ongoing Compliance:

• The registered entity must continue to comply with the conditions specified in the Income Tax Act to maintain its registration status.
• Entities should file their annual income tax returns and adhere to the prescribed activities to ensure ongoing compliance.

1. Communication with Tax Authorities:

• Maintain open communication with the tax authorities and promptly report any changes in the activities, trustees, or other relevant details.

 

VALIDY OF PERIOD

As of my last knowledge update in January 2022, the registration granted under Section 12A of the Income Tax Act in India is typically valid indefinitely, unless it is canceled by the tax authorities for specific reasons. Once an entity, such as a trust or institution, obtains registration under Section 12A, it remains registered until it no longer meets the prescribed conditions or fails to comply with the provisions of the Income Tax Act.

Key points regarding the validity of the registration period:

1. Indefinite Validity: The registration under Section 12A is generally considered to be valid indefinitely unless there are changes in the entity's circumstances or non-compliance with the conditions specified in the Act.
2. Cancellation of Registration: The tax authorities have the authority to cancel the registration if the entity ceases to exist, ceases to carry on charitable or religious activities, or fails to comply with other specified conditions.
3. Voluntary Surrender: In some cases, an entity may voluntarily surrender its registration under Section 12A if it no longer wishes to avail tax exemptions or if it undergoes changes that affect its eligibility.
4. Ongoing Compliance: To maintain the registration, the entity must continue to engage in activities that align with its charitable or religious objectives. Filing timely and accurate annual income tax returns is also a crucial aspect of ongoing compliance.

DOCUMENTS REQUIRED FOR 12A

When applying for registration under Section 12A of the Income Tax Act in India, certain documents are required to support the application. These documents help establish the nature, objectives, and activities of the trust, institution, or entity seeking registration. While the specific requirements may vary, here is a list of common documents typically needed for the 12A registration:

1. Application Form:

• A duly filled and signed application form for registration under Section 12A. This form is usually available on the official website of the Income Tax Department.

1. Trust Deed or Governing Document:

• A copy of the trust deed or any other governing document that outlines the objectives, aims, and activities of the entity. The trust deed should clearly establish that the entity is established for charitable or religious purposes.

1. Memorandum of Association (MOA) and Articles of Association (AOA):

• If applicable, a copy of the memorandum of association and articles of association of the entity.

1. Details of Trustees or Office Bearers:

• Information about the trustees or key office bearers, including their names, addresses, PAN (Permanent Account Number), and other relevant details.

1. PAN of the Entity:

• A copy of the PAN card of the trust or institution seeking registration.

1. Proof of Address:

• Documents establishing the registered office address of the entity. This may include utility bills, rent agreement, or any other valid proof of address.

1. Audited Financial Statements:

• Audited financial statements, including the balance sheet, income and expenditure statement, and receipts and payment account for the preceding three years.

1. Details of Activities:

• Comprehensive details about the activities undertaken by the entity in furtherance of its charitable or religious objectives. This may include project reports, brochures, and other supporting documents.

1. PAN of Trustees:

• Copies of PAN cards of all the trustees.

1. Board Resolution:

• A resolution passed by the board of trustees or governing body authorizing the application for registration under Section 12A.

1. Any Other Supporting Documents:

• Any other documents or information that may be required by the tax authorities to verify the eligibility and compliance of the entity.