What is exemption under section 80G?
Section 80G contained in Chapter VI-A of The Income-Tax Act, 1961, deals with the deductions in respect of the donations made to certain charitable institutions and funds by any assessee in the previous year. Sub-section (2) thereof enlists various charitable institutions and funds. Donations made to such institutions and funds are deducted (in accordance with and subject to the provisions of section 80G from gross total income of such an assessee to compute his total income.
How a Charitable Institution/Trust/Organization gets registration of Section 80G?
Amendment has been made in Section 80G (5) of Income Tax Act, 1961 by Finance Act 2020, according to which, all entities which are:-
Currently approved under this section, are required to apply for a fresh approval under the amended scheme of Section -80G And all new entities which want to apply for fresh registration under this section are required to apply for approval under the new scheme.
Rule 11AA, prescribes the requirements for approval of institution of fund under clause (vi) of sub-section (5) of section 80G:-
- 1) An application for approval under clause (vi) of sub-section (5) of section 80G, the institution or fund (hereinafter referred to as ‘the applicant’) shall be made in the following Form, namely:-
- (a) Form No. 10A in case of application under clause (i) or clause (iv) of first proviso to subsection (5) of section 80G to the Principal Commissioner or Commissioner authorised by the Board; or
- (b) Form No. 10AB in case of application under clause (ii) or clause (ii) of first proviso to subsection (5) of section 80G to the Principal Commissioner or Commissioner authorised under the said proviso.
The application under sub-rule (1) shall be accompanied by the following documents, as required by Form Nos. 10A or 10AB, as the case may be, namely:
where the trust is created, or the institution is established, under an instrument, self-certified copy of the instrument creating the trust or establishing the institution.
- where the trust is created, or the institution is established, otherwise than under an instrument, self-certified copy of the document evidencing the creation of the trust, or establishment of the institution.
- self-certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be.
- self-certified copy of the documents evidencing adoption or modification of the objects, if any.
- where the trust or institution has been in existence during any year or years prior to the financial year in which the application for registration is made, self certified copies of the annual accounts of the trust or institution relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up; note on the activities of the trust or institution.
- self-certified copy of existing order granting registration under section 12A or section 12AB, as the case may be; and
- self-certified copy of order of rejection of application for grant of registration under section 12A or section 12AB, as the case may be, if any.
- In case of existing entities, copies of annual accounts for the period not exceeding 3 years immediately preceding the year in which the application is made.
- Where the income of the entity includes profits and gains of business as per the provisions of sub-section (4A) of section 11, copies of annual accounts and audit report u/s 44AB for 3 years immediately preceding the year in which the said application is made.
- Self-certified copy of the documents evidencing adoption or modification of the objects.
- Notes on the activities of the applicant trust or institution.
- If registered on DARPAN Portal, then details of such registration.
Additional Documents needed –
- If PAN/Aadhar available- PAN and Aadhar of all authors/ settlors/ trustees/ Members of Governing Council/ Members of societies/ Shareholders holding not less than 5% shares.
- If PAN/ Aadhar not available: – Voter ID or Passport or Driving License of the above persons.
On receipt of an application in Form No.10A, the Principal Commissioner or Commissioner, authorised by the Board shall pass an order in writing granting approval under clause (i) or (iii) of the second proviso read with third proviso of sub-section (5) of section 80G in form 10AC and issue a sixteen-digit alphanumeric Unique Registration Number (URN) to the applicants making application as per clause (a) of the sub-rule (1).
Compliance to be done after registration
- Maintain proper books of accounts as prescribed by law.
- File Income Tax return within prescribed time period and get books of accountants audited by Chartered Accountant.
- Stickly follow the guidelines subject to which registration has been granted.
- Furnishing of required details as per Rule 18AB for each financial year.
- Issue certificate to the donor in Form 10 BE.
- File Form 10BD which is a statement of particulars (of donations etc.) under clause (i) to sub-section (1A) of section 35 or under clause (viii) of sub-section (5) of section 80G of the Income-Tax Act, 1961.
Procedure for obtaining an approval of the institute or fund under clause (vi) of sub- section (5) of section 80G of the Income-Tax Act, 1961-as per substituted Rule 11AA: –
- Rule 06 of the notification dated 26th March, 2021, referred to above, substitutes new rule 11AA for the existing rule 11AA contained in the Income-Tax Rules, 1962.
- Substituted rule 11AA is further sub-divided in nine sub-rules.
- Substituted rule 11AA refers to four forms-form 10A, form 10AB, form 10BD and form 10BE.
- (02) Sub-rule (1) – Form 10A or form 10AB-an application for grant of approval.
- As the first step in the procedure for grant of an approval to an institution or fund under clause (vi) of sub-section (5) of section 80G of the Income-Tax Act, 1961, sub-rule (1) of the newly substituted rule 11AA prescribes that the applicant institution or fund shall make an application for grant of an approval as above to the Principal Commissioner of Income-Tax or the Commissioner of Income-Tax.in the following forms: –
- Sub-rule of rule 11AA Form Particulars.
- Clause (a), sub-rule (1) 10A Under Clause (i) of first proviso to sub- section (5) of.
- section 80G-applicants having an ‘existing approval under pre-amendment provisions’ OR
- Under Clause (iv) of first proviso to sub-section (5) of section 80G-applicants falling ‘in other cases’-(other than clauses (i), (ii) and (iii) of first proviso to sub- section (5) of section 80G like 1st time fresh applications.
- Clause (b), sub-rule (1) 10AB Under Clause (ii) of first proviso to sub-section (5) of section 80G-applicants requiring ‘renewal of approval granted under post-amendment provisions’ OR under clause (iii) of first proviso to sub-section (5) of section 80G-applicants to whom ‘provisional approval is granted under post-amendment provisions.’
- Earlier form 10G for grant of approval under clause (vi) of sub-section (5) of section 80G is withdrawn; 2. Form 10A as substituted for earlier form 10A is to be used separately (i) for registration S 12AB and (ii) for approval under clause (vi) of sub-section of S. 80G. Separate section code out of different nineteen codes as applicable as stated in instruction No. 2 of form 10A is to be given either for registration of for approval as the case may be.