What is 80G and How to obtain that in India for Fundraising?

80G is a certificate which exempts an applicant partly or fully from paying taxes if the applicant has made donations to charitable trusts or section 8 company or organizations that are registered to offer exemptions from taxes.

Any charitable organization or trust registered under Section 12AA allows the applicant to avail tax exemption under Section 80G. There is a maximum deduction criteria allowed. The criterion is, if the aggregate of the amount an applicant donates exceeds 10% of the total gross income, then the extra amount will not qualify for any kind of tax benefit. 80G certificates is an important tax-saving certificate.

DOCUMENTS REQUIRED FOR 80G REGISTRATION:
For an 80G registration, an applicant needs to submit the following documents in Form 10G.

1. The first and foremost document for 80G registration is Form 10G,
2. Registration certificate and Memorandum of Association (MOA) in case of Section 8 company or Societies or a Trust Deed in case of a Trust,
3. No objection certificate (NOC) from the owner of the property where the registered office of the said Institution is situated,
4. Photocopy of the PAN of the NGO,
5. Photocopy of the electricity bill, water bill, or tax receipt,
6. List of donors,
7. Identity proof and PAN of the list of donors,
8. Income tax return receipts and the book of account of the last three years,
9. List of board of trustees and their details,
10. A list of welfare activities which are being carried out in the organization and the progress report of the said organization for the past three years,
11. Original Registration Certificate (RC), Memorandum of Association (MOA), and/or Trust Deed.

PROCEDURE FOR AN 80G REGISTRATION:
The stages for the purpose of 80G registration are as follows,

1. The first thing to do is to apply for the 80G certificate to the Commissioner of Income Tax, along with the required documents.

2. After the formation of the said Institution, an on-site inspection is done by the Income Tax Department, and then the required documents for the Registration are submitted,

3. The income tax officials may ask for some additional documents or evidences for their perusal,

4. After the verification and satisfaction of the additional documents, the Institution gets the 80G certificate for the Institution by the Commissioner.

80G REGISTRATION CAN GET CANCELED IN THESE CASES-

1. When an NGO runs the promotion or benefit for the purpose of religion, caste, community, etc.

2. When NGO receives funds or gifts from political parties or international sources.

3. When NGO stars working as a commercial profit-based organization.

4. Under NGOs’ operational activities, no member is allowed to make commercial profit-based activities. There should be separate books of accounts for such income.

5. Any kind of misuse of 80G provision can lead to the cancellation of services.

Both Sections 12AA and 80G of the Income Tax Act, the application can be applied together jointly or separately. If an applicant wants to apply those applications separately, then an application under Section 12AA should be applied first. To apply for Registration under Section 80G, it is necessary to get Registration under 12G.

ELIGIBILITY FOR 12AA AND 80G REGISTRATION:

1. NGOs which are working as Public Charitable Trust or under Section 8 of the Company Act, 2013, working for the public welfare are allowed to apply under this provision,

2. Donations that are permitted under Section 80G is allowed for tax exemption,

3. NGO assets should be used for charitable purposes only,

4. NGOs should properly maintain books of accounts for the purpose of expenditures and receipts.

BENEFITS OF 12AA AND 80G REGISTRATION:

1. More capital is allowed for charitable activities through tax exemption.

2. Funds and grants are allowed from recognized agencies, Government, and International sources.

3. Only a Section 12AA and 80G, registered as NGOs, are allowed to accept International funding with exemptions available under the Foreign Regulation Act, 2010 or FCRA.

4. Both of these Attracts more donors, expanding the scope of fulfilling the NGO objectives.

5. When the NGOs get registered and obtain 12AA and 80G registration, operational exposure and status value get increased.

6. Both the 12AA and 80G registration are one-time registrations and valid upto the lifetime of an NGO.