How to Apply for 80G Certificate
The 80G certificate is an important resource for non-governmental organizations (NGOs) in India as it helps them to raise donations by providing relief to donors by way of tax benefits. Granted under Section 80G of the Income Tax Act, 1961, the certificate helps donors claim tax deductions on their taxable income in respect of donations made to NGOs that are covered under the same. This article explores the importance of the 80G certificate, the procedure for registration, and its advantages.
What is an 80G Certificate?
An 80G certificate is granted by the Income Tax Department to NGOs, charitable trusts, or Section 8 companies that are undertaking philanthropic work. It encourages giving by enabling donors to deduct up to 50% of their donated value from their tax payments. The twofold benefit encourages charitable contributions while enabling NGOs to raise funds for their work.
To be eligible for an 80G certificate, an organization should fulfill the following criteria:
It should be registered as a society, trust, or Section 8 company.
Its objectives should solely be charitable in nature.
The organization should not limit its benefits to any particular religious community or caste.
It should keep proper financial records and maintain transparency in its work.
Benefits of 80G Registration
- Tax Relief for Donors: Donors are allowed to claim tax deductions on their donations, hence making it economically rewarding to contribute to registered NGOs.
- Higher Contributions: The tax relief invites people and businesses to donate more generously.
- Qualification for CSR Contributions: Corporate social responsibility (CSR) contributions usually demand NGOs to possess both 12A and 80G certificates.
- Increased Reliability: Possession of an 80G certificate enhances the credibility and reliability of an NGO in front of donors and stakeholders.
- Access to Government Grants: Most government programs make 80G registration a mandatory requirement for funding.
Difference Between 12A and 80G Registration
Though both the registrations are necessary for NGOs, they play distinct roles:
12A Registration: Offers income tax exemption for the NGO itself, making its income untaxed.
80G Registration: Provides tax relief to donors donating to the NGO.
Both of these certifications boost financial sustainability and donor trust.
How to Apply for 80G Registration
The steps involved in getting an 80G certificate online are as follows:
Step 1: Prerequisites
Ensure that your NGO has the following prerequisites before applying for 80G registration:
Valid 12A registration, which is mandatory.
Proper documentation, such as:
- Registration certificate of the NGO (trust deed or incorporation documents).
- PAN card of the organization.
- Financial statements (audit reports) for the past three years (if applicable).
- Details of activities performed during the past three years.
Step 2: Application Submission
File Form No. 10A online on the portal of the Income Tax Department. The form demands elaborate information regarding the organization, such as its purpose, governance, and financial statements.
Step 3: Verification of Documents
The application and documents submitted will be scrutinized by the Commissioner of Income Tax (Exemptions). The department can ask for further information or carry out an on-site inspection to authenticate the activities of the NGO.
Step 4: Issuance of Certificate
If the commissioner is satisfied with the application and verification process, the 80G certificate will be issued. The certificate will generally be valid for five years, after which it needs to be renewed.
80G Certificate Format
The format of an 80G certificate consists of:
- Name and address of the NGO.
- Unique Registration Number (URN).
- Date of issue and validity period.
- Reference to Section 80G(5)(vi) of the Income Tax Act.
- Information regarding tax deduction eligibility for donors.
This report acts as evidence for donors when applying for tax deductions on their donations.
Fees for 80G Registration
Fees for 80G registration differ depending on whether you file directly through government means or use professional services. Although government filing charges are low, professional services can cost between ₹2,999 and ₹19,999 depending on their packages. Professional services tend to cover end-to-end services in preparing applications and handling compliance matters.
Renewal Process
For NGOs with provisional registration under Section 80G:
- Renew at least six months prior to the date of expiry or within six months from the date of commencement of activities.
- Provide revised documents reflecting recent activity and financial data.
- Wait for re-assessment by the Income Tax Department before being granted permanent approval.
Difficulties in Getting an 80G Certificate
Even though it has benefits, getting an 80G certificate is not easy because strict eligibility norms demanding transparency in operations. Comprehensive documentation needs. Delays due to incomplete application forms or further questions by authorities. In order to defeat these, numerous NGOs seek the help of professionals to make the process simpler.
Conclusion
The 80G certificate is a vital asset for NGOs in India. It not only incentivizes donations through tax benefits but also enhances organizational credibility and access to funding opportunities. By understanding the 80G registration process, maintaining compliance with legal requirements, and leveraging professional support when needed, NGOs can maximize their impact while fostering a culture of philanthropy in society.