The ultimate guide to 80G Mandatory Certificate for Your Non-Profit Business
From FY 2022-23, Section 80G tax deduction requires an obligatory certificate from the income tax portal.
Under Section 80G of the Income-tax Act, 1961, you can claim a tax deduction for money you give to a charity or non-profit organisation. This implies that depending on how much you donated, you can lower the amount of tax you must pay. However, you now require a certificate from the charity or NGO you donated to in order to claim this deduction when you file your income tax return (ITR). This certificate, which demonstrates that you made the donation and the amount you donated, is comparable to a TDS certificate. The e-filing portal for the income tax department is where you may download this certificate.
In conclusion, obtain a certificate from the charity or NGO you donated to in order to claim a tax deduction for your donation when you file your tax return. You can download the certificate from the income tax department’s e-filing portal.
Filing of Statement of Donations by the charitable institution
To claim the deduction under Section 80G. This statement must be submitted by May 31 of the calendar year that follows the year the donation was received, at the latest. For instance, the statement of donation in Form 10BD for a donation received by an NGO in FY 2022–2023 must be submitted on or before May 31, 2023. Additionally, when filing their ITR for the relevant financial year, the donor must include the information listed on the donation certificate.
The donee institution or NGO must first submit Form 10BD statement via the income tax department’s electronic filing system in order to claim a deduction under Section 80G when filing an income tax return (ITR). The donee institution must download the donation certificates from the portal after filing the statement because they are only generated after Form 10BD is submitted. Similar to TDS certificates, these certificates serve as the taxpayer’s evidence of donation. Therefore, in order to claim the deduction under Section 80G when filing an ITR, the taxpayer needs to obtain the donation certificate from the donee institution or NGO.
Donors must give the institution their name, address, and identification proof in order for the donee institutions to be able to file statements of donations. Other identity proof numbers may be utilised, although it is desirable to have a copy of the donor’s PAN and Aadhaar. The following identification proof numbers are accepted when submitting Form 10BD (statement of donations):
1 Permanent Account Number (PAN)
2 Aadhaar Number
3 Tax Identification Number
4 Passport Number
5 Elector’s photo identity number
6 License Number
7 Ration card Number
The donor must disclose personal information and the reason for their giving, such as a corpus or particular grant, in addition to their personal information. It’s crucial to keep in mind that receiving a certificate of gift and making a donation do not guarantee that you will be able to claim a deduction. The donation must be made in cash, and the giver must list it as a deduction on their tax return. Under Section 80G, donations made in kind are not tax deductible. Only donations made with cash, cheque, or electronic means are eligible for deductions. Cash donations over Rs 2,000, however, are not allowed to be deducted.
Issuance of a contribution certificates
The donee institution is required to give the donor a certificate of donation in Form 10BE, which details the amount of donations received throughout the year, when the statement of donations has been submitted by the donee institution. This certificate is evidence that can be used to support a section 80G deduction claim. By May 31 of the calendar year immediately after the year the donation was received, the certificate of donation in Form 10BE must be issued. To give time for creating and sending the Form 10BE to the donors, the donee institution should submit Form 10BD in advance.
An organisation can obtain the donation certificate (Form 10BE) for each individual contributor after uploading Form 10BD to the income-tax e-filing system. The organisation should email or use another suitable mechanism to provide this certificate to the relevant donors. The sole authentic certificate of contribution is Form 10BE, which can be acquired through the e-filing portal. It contains details about the donee, the donor, and the donation in addition to a special contribution Reference Number (ARN). When claiming the deduction under Section 80G of the ITR form, the donor must include this ARN in “Schedule 80G.” It is crucial to understand that the organisation cannot manually construct the certificate of donation; rather, it must be downloaded via the e-filing portal.
Consequences of Failure to Comply with these rules
There are repercussions if the donee institution fails to submit the statement of donations in Form 10BD or fails to give the donor the certificate of donation in Form 10BE. For the duration of the default, the donee institution will be charged a fee of up to Rs 200 per day. Before submitting the statement of donation or issuing the certificate of donation, the cost must be paid. In addition, if the donee institution forgets to provide the statement of contribution or give the donation certificate, Section 271K may impose a fine of Rs 10,000. The maximum fine for this offence is Rs 100,000.
