Understanding the 80G Certificate
An 80G Certificate is a vital tax exemption document issued by the Income Tax Department of India that allows donors to claim deductions on donations made to eligible charitable institutions and NGOs. This provision, under Section 80G of the Income Tax Act, 1961, encourages philanthropy by offering tax benefits to individuals and organizations that contribute to approved charitable causes.
Eligibility Criteria for 80G Certificate
Not all charitable organizations qualify for an 80G registration. The following conditions must be met:
- The organization must be registered under the Societies Registration Act, 1860, or the Indian Trusts Act, 1882.
- The institution should not have any religious or business-related objectives.
- The organization’s accounts must be duly audited every year.
- Donations must be used exclusively for charitable purposes.
- The organization should not receive funds from any political party.
- It must not engage in any profit-generating activities.
Tax Benefits of an 80G Certificate
The primary advantage of donating to an 80G-certified organization is the ability to claim a deduction while filing income tax returns. The deduction percentages vary based on the type of organization:
- 100% Deduction: Certain government-approved funds like the Prime Minister’s National Relief Fund qualify for a full deduction.
- 50% Deduction: Most NGOs and charitable organizations fall under this category.
- With or Without Limit: Some donations have an upper limit of 10% of the gross total income, beyond which no deduction can be claimed.
Documents Required for 80G Registration
For an organization to apply for 80G registration, it must submit the following documents:
- Copy of PAN card of the trust or NGO
- Certificate of Registration under the Societies Act or Trust Act
- MOA (Memorandum of Association) and AOA (Articles of Association) for NGOs
- Audited financial statements of the last three years
- List of donors and their details
- Bank account details
How to Apply for an 80G Certificate?
The application process for 80G registration involves the following steps:
- Filing Form 10A or 10G: Submit the application online through the Income Tax Department’s portal.
- Attach Required Documents: Ensure all mandatory documents are uploaded.
- Verification Process: The Income Tax Department may conduct an inspection of the NGO’s office.
- Approval and Issuance: If satisfied, the department will issue the 80G certificate, valid for 5 years.
Renewal Process for 80G Registration
The Finance Act 2020 introduced changes to 80G registration, requiring NGOs to renew their certificate every five years. The process involves:
- Filing a fresh application online
- Submitting updated financial reports
- Providing proof of ongoing charitable activities
80G vs 12A Registration: Key Differences
While both 80G and 12A registrations offer tax benefits, they serve different purposes:
| Feature | 80G Registration | 12A Registration |
|---|---|---|
| Purpose | Tax benefits for donors | Tax exemption for NGOs |
| Beneficiary | Donors | NGO itself |
| Validity | 5 years (renewable) | Permanent until revoked |
| Application Form | 10G | 10A |
Conclusion
An 80G certificate is an essential compliance requirement for NGOs seeking financial support from donors. It not only encourages philanthropy but also enhances an organization’s credibility. By obtaining this certification, NGOs can attract more donations while enabling contributors to benefit from tax deductions.
