How to register your NGO under sec.80G By Sanjay Kumar Jha

How to register your NGO under sec.80G
of Income Tax Act 1961?
By Sanjay Kumar Jha
NGO Guru
What is section 80G?
• If, an organization has obtained certificates under section 80G of
Income tax Act, 1961, then the donors to the NGO, can claim
exemption from their individual Income.
• Registration under section 12A(a) and section 80G, can be applied
and obtained together but, generally the offices of several
commissioner, first issue registration under section 12A (a),
thereafter grant, registration under section 80G.
By Sanjay Kumar Jha NGO
Guru
Documents / Papers, required to be
submitted for registration under
section 80G.
• Covering letter
• Form 10G, duly filled & signed.
• Copy of registration under section 12A (a) of Income Tax Act
1961 (obtained before, applying separate for registration under
80G).
• Up-to-date Income Tax Return ITR-7 [if 12A registered].
• Audited Financial Statements (updated).
• Annual Report of Financial, and Physical Performance and
Statutory Compliance.
• Proof of activities.
• List of donors (with details).
• List of Governing body.
By Sanjay Kumar Jha
NGO Guru
Registration is granted in following
steps:Step 1 :- Once the application is made, wait until
you receive Notice from department
within six (6) months.
Step2 :- The notice requires the NGO to appear
before Income tax authority with
books of accounts/ original requisite
documents, vouchers, and other
records .
Step 3 :- On examination of the evidences and
books of accounts & being satisfied,
The commissioner issues certificate
under section 80G of Income Tax
Act,1961.
By Sanjay Kumar Jha
NGO Guru
Conditions on section.80G
• The NGO should not have any income which are not exempted such as
BUSINESS INCOME (if any).
• If, the NGO has business income then it should maintain separate books of
accounts and should not divert donations received , for the purpose of such
business.
• The byelaws of the NGOs should not contain any provision for spending
Income or Assets of the NGO for purpose other than charitable, for the
benefit of the public at large.
• The NGO is not workings for the benefit of particular religious community
or caste.
• NGO should maintain all statutory, financial and activities papers
/documents, properly supported with the true form of Receipts /Payment
/Assets / Liability /Capital of the NGO.
By Sanjay Kumar Jha
NGO Guru
Contd..
• Object to establish schools for Muslim to teach Urdu, Arabic etc. which is
charitable in nature not religious.
• No part of the income should be applied, directly or indirectly, for the
benefit of the settler or other specified persons.
• The property of NGO, should be held wholly for charitable purpose.
• If the commissioner is satisfied that the activities of any NGO are not
genuine or not carried out in accordance with the objectives of the NGO.
The commissioner shall pass order in writing (after providing an
opportunity of being heard to the concern NGO), Cancelling the registration
granted under section 12A and 80G .
By Sanjay Kumar Jha
NGO Guru
Important Note:• Anonymous donation will not be eligible for
deduction under section 11 and 12, from the
assessment year 2007-08:
All anonymous donations are taxed @30% under section
115 BBC.
 There in levy of tax at maximum marginal rate of tax
exemption.
 In the case the NGO do not invent, their investment pattern
other then forms/Modes, as specified under section 11(5) of
income Tax.
By Sanjay Kumar Jha
NGO Guru
Q. WHAT IS TAX EXEMPTION LIMIT UNDER SECTION
80G ON DONATION?
• There is a limit on maximum amount of exemption under section
80G and deduction admissible under this section, the three
steps, have to be observed to any tax payer (may be individual
firm, HUF, Company):Step 1 :- Find out gross qualifying amount.
Step 2 :- Find out net qualifying amount.
Step 3 :- Find out the amount deductible.
 If the amount of deduction to an NGO is more than 10% of the gross total
income computed under the Act ,that the amount in excess of 10% of
gross total Income shall not qualifying ,for deduction under 80G.
 The donor under section 80G, will get a deduction of 50% from their
taxable Income. Here at times, a confusion creeps in, that the tax
advantage under section 80G is 50%, But actually it is not so . 50% of
donation made is allowed to be deducted from taxable income and
accordingly the tax is calculated.
By Sanjay Kumar Jha
NGO Guru
Computational details regarding
deduction under section 80G
• In some cases, there is no maximum limit for the
deduction which can be claimed for donations
made under section 8OG.
• However, in some cases deduction on donations
under Section 80G is limited to 10% of the
Adjusted Gross Total Income of the taxpayer.
By Sanjay Kumar Jha
NGO Guru
By Sanjay Kumar Jha
NGO Guru
The adjusted gross total income of a taxpayer for the purpose of section
80G is computed as follows: Particulars
Amount
Gross Total Income
xxx
(Less) Long Term Capital Gains
xxx
(Less) Short Term Capital Gains on
Sale of Shares u/s 111A
xxx
(Less)Deductions under Section 80C
to Section 80U
xxx
(=) Adjusted Gross Total Income
Less) Deduction under Section 80G*
(=) Total Taxable Income
xxx
Xxx
Xxx
*** Deduction under Section 80G is limited to a maximum of 10%
of the Gross Total Income.
By Sanjay Kumar Jha
NGO Guru
Eligibility of Donations
• Donations eligible for Full Deduction
•
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National Defence Fund set by the Central Govt.
Prime Minister's National Relief Fund
Prime Minister's Armenia Earthquake Relief Fund
National Foundation for Communal Harmony
University/ Education Institution of National eminence approved by the prescribed authority
Maharashtra Chief Minister's Earthquake Relief Fund
Any Fund set-up by the State Govt of Gujarat, exclusively for providing relief to the victims of earthquake
of Gujarat
Zila Saksharta Samiti constituted in any district
National Blood Transfusion Council or any State Blood Transfusion Council
Any fund set up by the state Govt to provide Medical Relief to the poor
Army Central Welfare Fund or Indian Naval Benevolent Fund or the Air Force Central Welfare Fund
National Illness assistance Fund
Andhra Pradesh Chief Minister's Cyclone Relief Fund
Chief Minister Relief Fund or the Lieutenant Governor's Relief Fund in respect of any State or Territory
National Sports Fund set up by the Central Govt
National Cultural Fund set up by the Central Govt
Fund for Technology Development and Application, set up by the Central Govt
National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple
Disabilities.
By Sanjay Kumar Jha
NGO Guru
Eligibility of Donations
• Donations eligible for 50% Deduction:•
•
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National Defence Fund set by the Central Govt.
Prime Minister's National Relief Fund
Prime Minister's Armenia Earthquake Relief Fund
National Foundation for Communal Harmony
University/ Education Institution of National eminence approved by the prescribed authority
Maharashtra Chief Minister's Earthquake Relief Fund
Any Fund set-up by the State Govt of Gujarat, exclusively for providing relief to the victims of earthquake
of Gujarat
Zila Saksharta Samiti constituted in any district
National Blood Transfusion Council or any State Blood Transfusion Council
Any fund set up by the state Govt to provide Medical Relief to the poor
Army Central Welfare Fund or Indian Naval Benevolent Fund or the Air Force Central Welfare Fund
National Illness assistance Fund
Andhra Pradesh Chief Minister's Cyclone Relief Fund
Chief Minister Relief Fund or the Lieutenant Governor's Relief Fund in respect of any State or Territory
National Sports Fund set up by the Central Govt
National Cultural Fund set up by the Central Govt
Fund for Technology Development and Application, set up by the Central Govt
National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple
Disabilities.
By Sanjay Kumar Jha
NGO Guru
With Regards
Sanjay kumar Jha
NGO Guru
NGO Helpline
208,Jagat Trade Centre,
Fraser Road, Patna-1
[Bihar]
By Sanjay Kumar Jha
NGO Guru