TAX EXEMPTION ON DONATIONS UNDER SECTION 80G
A voluntary help, either in terms of money or kind, towards needy people, is known as charity. It not only makes you feel happy from within, but when you donate you can also save some tax.
Today, there are various Non-Governmental Organizations (NGOs) and other non-profit bodies that collectively work towards conducting charitable activities that help them raise funds or non-monetary charity for people in need. Such institutions have put forth their best efforts that further play a significant role in promoting the various economic development and social welfare objectives that the Indian Government has initiated. The outreach and localized approach that NGOs and other non-profit entities follow has allowed for the identification of the needy and helps in ensuring that a supporting hand is provided to them. This is one of the key reasons why the Government of India offers tax incentives and exemptions to NGOs and charitable organizations with the exemptions under Section 80G of the Income Tax Act being the most significant ones.
What is Tax Exemption?
The reduction or removal of a liability to make a mandatory payment that is otherwise imposed by the ruling power on a property, individual, income, and so on, is known as tax exemption. Having a tax-exempt status may also provide relief from other taxes, offer reduced rates, or tax only on a portion of certain items. Exemption of tax for donations to charitable trusts and NGOs, from property and income taxes for veterans, cross-border scenarios, and so on, are some of the examples of tax exemption. An important thing that organisations need to keep in mind is that the registrations are granted under Section 12A of the Income Tax Act. However, that doesn’t give direct approval for deductions under Section 80G. This is because Section 80G tax benefits on donations apply only to charitable trusts, NGOs, and similar institutions. It doesn’t apply to religious trusts or institutions.
Section 80G of the Income Tax Act of 1961 is a little different, as it provides tax exemption to charity donors as well. Donations to an NGO under 80G offers deductions while calculating the total income of the donor. The recipient of the charity donation gives a receipt of donation to the donor based on which they get the entitled deduction, provided the NGO or charitable trust is approved under Section 80G. In addition to this, tax exemptions on charity are also applicable, provided the charity organization is established in India and is operating for charitable purposes in the country.
• They should be registered under the Societies Registration Act 1860 or Section 25 of the Companies Act 1956.
• The objectives of the NGO, the online donation platform or the charitable organization must not specify the spending income or the assets if they are not seeking support in humanitarian causes.
• The NGOs and charitable organizations should not be discriminating their spending or donations on a particular religious community or caste.
• The NGO or the charitable trust should not exempt any source of income, which includes business incomes.
• The NGO and the charitable organization must have their accounts maintained with accurate receipts and expenditures.
2. The amount, received as the donation is fully utilized only in the welfare activities of the destitute, physically challenged, and needy persons.
Case 1: Double transaction or wrong amount entered: – Request mail required to be sent on firstname.lastname@example.org mail ID with a valid reason. After verifying details of the transaction and justifying reason with respect to the gift acceptance policy, the amount as received is refunded and the transaction charges shall be borne by the concerned donor. The process completes within 30 days of the date on which ‘the request mail’ has been received.
Case 2: If any transaction is cancelled by the user during the processing period and the amount is not credited in the account of the Organization but has been debited from the user account, TODA FOUNDATION is not at all responsible for a refund for the same. The matter has to be resolved by the user with their bank/merchant. The Organization shall resolve the matter up to the extent of its limit. For this, the donor is kindly requested to email their concern to the Organization at email@example.com