80G - Income Tax Exemption
NGO can avail income tax exemption by getting itself registered and complying with certain other formalities, but such registration does not provide any benefit to the persons making donations. The Income Tax Act has certain provisions which offer tax benefits to the "donors". All NGO's should avail the advantage of these provisions to attract potential donors. Section 80G is one of such sections.
If an NGO gets itself registered under section 80G then the person or the organisation making a donation to the NGO will get a deduction of 50% from his/its taxable income. The NGO has to apply in Form No. 10G As per Annexure - 29 to the Commissioner of Income Tax for such registration. Normally this approval is granted for 2-3 years.
The application form should be sent in triplicate to the Commissioner of Income Tax alongwith the following documents :
Copy of income tax registration certificate.
Detail of activities since its inception or last three years whichever is less
Copies of audited accounts of the institution/NGO since its inception or last 3 years whichever is less.
Conditions to apply to 80G:
The NGO should not have any income which are not exempted, such as business income. 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 bylaws or objectives of the NGOs should not contain any provision for spending the income or assets of the NGO for purposes other than charitable.
The NGO is not working for the benefit of particular religious community or caste.
The NGO maintains regular accounts of its receipts & expenditures.
The NGO is properly registered under the Societies Registration Act 1860 or under any law corresponding to that act or is registered under section 25 of the Companies Act 1956.