NGO donation tax exemption

1. Title:- NGO Donation Tax Exemption: What You Need to Know Before Donating Blog:- Donating on a non-governmental organization (NGO) does not only mean the noble act of contributing towards the improvement of society but also rewards the donor in the financial sense. In India, the government gives tax benefits to those who have donated to NGOs as a scheme for the promotion of philanthropy and more other social causes. This paper aims to get deeper into the understanding of NGO donation tax exemption, the benefits it presents, and the procedure used in availing it. Understanding donation tax exemption on NGOs What is Tax Exemption on Donation to NGOs? Tax exemption is abolition of or an increase in the deduction of amounts that are subjected to tax exemption on donation to ngo, which are specified under the provision meant for Section 80G of the Income Tax Act, 1961. When one donates to an NGO having specific Indian Income Tax exemption rights, one can claim an exemption. This exemption can be availed by individuals as well as entities, to promote involvement in social development through their NGO support. Who Can Tax Exemptions by The Government Offered To Donations Made To NGOs Moreover, the government sees the importance of NGOs in dealing with the social environmental, educational, and health-related issues. For this reason, tax exemptions ensure that there is: An increased rate of donations; -More people and organizations stricken by the cause want to donate. Employment in social causes; -Education, healthcare, poverty reduction, and natural disaster relief. More transparency: -Provided tax exemptions, registered NGOs with the right to apply for scrutiny about where the money donated to them is being spent and no room for mismanagement by the use of this money. Crucial Notes for Tax Exemptions: Donations to NGOs in India Section 80G As Per Income Tax Act Most frequently, donors may qualify for deductions under this provision for tax exceptions while deciding to donate to NGOs. Key points to be considered are:- Section 80G is the most common provision under which donors can claim tax exemptions on donations to NGOs. Here are the essential aspects:

2. • those who might earn under the same elective and registering can provide the donations by owners. Eligibility: Not all NGOs can have tax exemption under Section 80G. Only • amount of donation under Section 80G, based on the commitment and certification. Percentage of Deduction: It takes the deduction of 50% or 100% on the • deduction has been considered. However, some situations have been realised with the relaxation of the limit. Deduction Limit: A minimum 10% to the donor's gross total income per Section 35AC of the Income Tax Act Another way of contribution in the Income Tax Act is through an additional Chapter VI A - Section 35AC. This section makes it possible for the individuals and corporate bodies to claim a deduction of donations made to NGOs engaged in doing social activities and for certified projects approved by the Central Government. It is really convenient for the corporate cause. Section 80GGA of the Income Tax Act This section offers tax benefits towards donations for a programme of research wariness or rural development. NGOs in these domains have to meet some standards in order to be considered in the Section 80GGA. How to Avail Tax Exemption Against One's Donation to NGOs Step 1: Make Sure the NGO Is Registered and Is Eligible One should ensure that the NGO is registered with the Income Tax Act and has an appropriate certificate in addition to 80G or 35AC, before making the donation. It is found that the majority of NGOs have their registration details and a certificate on websites or can also be delayed on request. Step 2: Seek Receipt Afterward the donation is made, a receipt must be duly issued for the donation. Such receipt duly records the following details: Name and address of the NGO • • PAN (Permanent Account Number) of the NGO • Registration number of the NGO under Section 80G • The sum of money donated shall be spelled out in words and in figures • Specifying your name as the donor Step 3: Maintain Supporting Documents: Maintain Supporting Documents

3. Regarding the receipt, keep a record of the certificate which was provided by the NGO that must comply with Clause 80G or other sections somewhere in Act according to the mentions for exemption at the time of computing taxes in respect of income. These are the documents to be claimed as deductions pertaining thereto at the time of filing income tax returns. Step 4: File Your Income Tax Returns During tax returns, be sure to provide all of the necessary details about the donations under part VI-A and the supporting documentation. For those filing online, please upload the receipt and certification scanned where necessary. What Are The Benefits of Giving to NGOs? 1. Tax Benefits The most obvious financial benefit offered by donating to an NGO is the reduction of your taxable income, thus your taxes would be reduced. For example, if your total income is INR 10,00,000 then you decide to donate INR 1,00,000 to an eligible NGO, you may claim a deduction of up to INR 1,00,000 (such figures being dictated by limits and conditions), thereby reducing your taxable income. 2. Contribution to Social Welfare Your donation allows an NGO to carry out works that will provide value to society. A gift from you, be it from the education of underprivileged children, health, or environment, stands to help. 3. Personal Satisfaction Apart from financial savings, donating to an NGO brings a sense of fulfillment and purpose, knowing that you are contributing to a worthy cause. Types of Donations for Which a Token Exemption is Granted 1. Money Donation Cash, cheque or digital payment through any mode to NGO are subject to tax exemption. However, amendments in the Finance Act have made it necessary to provide relevant legible particulars of the receipt against donations in cash exceeding Rs. 2,000. Anybody can avail the donation benefits under Section 80G on a cash gift of up to INR 2,000. 2. Donation in Kind It may also be qualified for exempt from a select donation like clothes, food, and/or equipment if the NGO issues a within-specifying the monetary value of the donations.

4. 3. Contribution to the Specific Funds Some donations can qualify for a 100% deduction under Section 80G, such as to the Prime Minister's National Relief Fund. Requirements Satisfied by NGOs before Being Accredited as a Tax-Exempt Entity 1. Registration The NGO must get itself registered under Section 12A and Section 80G of the Income Tax Act to be termed tax-exempt. Section 12A provides for tax exemption for income of the NGO, while Section 80G allows the donor to receive tax relief. 2. Compliance and Reporting Their tax-exempt status hinges on the organization conforming to certain accounting norms and filing periodic yield statements. An NGO is also required to maintain transparency regarding the utilization of funds. 3. Approval for Specific Projects For deductions under Section 35AC or 80GGA, NGOs must obtain approval for their projects from the National Committee constituted by the government. Challenges and Considerations 1. Authenticity of NGOs It is not necessary that all NGOs are genuine bodies and qualify for tax exemptions. Therefore, the donor should verify details of the NGO before making donations. 2. Documentation and Compliance Credibility of the claim to tax exemption will only be established if the necessary documentations (properly stamped and signed receipt/certificate) are submitted in support of the contribution. Failure to produce these documents might result in a denial of the claim. 3. Limits on Deductions For some deductions, there are percentages laid down beyond which the donations cannot be claimed. It is necessary that donors understand and avoid these discrepancies. Conclusion Donating to NGOs is a powerful way to foster civil society and support causes that are close to your heart. The tax exemption for NGO donations in India is one rewarding move that provides financial advantages to donors. Understanding provisions of the Income Tax Act, such as Section 80G, and fulfilling all related

5. requirements is possible. This way, you can multiply beneficial aspects to your philanthropic work. Supporting NGOs as an individual or a corporate entity may be good for their future objectives, offering at the same time tangible financial advantages. Affiliate an NGO with the privilege of smooth practice, collecting all necessary documentations, and claiming tax exemption to enjoy the dual effects of serving and saving taxes. Link:- 1 Do-follow tax exemption on donation to ngo https://www.indiaisus.com/ngo-donation-tax-exemption.html