80G Registration format for individual Parent Organisations

5. Names and addresses of trustees/office bearers of the institution
or fund
6. (i) If registered under section 12A(a) of the Income-tax Act, the
registration number and date of registration
(ii) If notified under section 10(23) or under section 10(23C) of the
Income-tax Act, the details thereof
(iii) If responses to (i) & (ii) are negative, whether any application for
the same has been filed? If yes, enclose a copy of the same.
7. (a) Period of last approval, if any. Please enclose a copy of the
approval
(b) If any change in the aims and objects and the rules and regulations
have been made since the last approval, the details thereof
8. Assessment particulars-
(a) Ward/Circle where assessed and permanent account number/GIR
number
(b) Is the income exempt under section 10(22), 10(22A), 10(23),
10(23AA), 10(23C) or 11?
(c) Whether any arrears of taxes are outstanding? If so, give reasons
9. Amount accumulated for the purposes mentioned in item (4) above
10. (i) Details of modes in which the funds are invested or deposited,
showing the nature, value and income from the investment;
(ii) Whether any funds have not been invested in the modes
specified Printed from www.taxmann.com in section 11(5)?
11. (i) Is the institution/fund carrying on any business? If yes, give details
(ii) Is the business incidental to the attainment of its objects?
12. Details of nature, quantity and value of contributions (other than cash)
and the manner in which such contributions have been utilised.
13. Details of shares, security or other property purchased by or
on behalf of the trust from any interested person as specified
in sub-section (3) of section 13.
14. Whether any part of the income or any property of the association was
used or applied in a manner which results directly or indirectly in
conferring any benefit, amenity or perquisite (whether converted into
money or not), on any interested person as specified in sub-section (3)
of section 13? If so, details thereof.
I certify that information furnished above is true to the best of my knowledge and belief. I undertake to communicate forthwith any alteration in the terms or in the rules governing the institution/fund made at any time hereafter.
Place
Date Signature
Designation
Address


Notes : The application form (in triplicate) should be sent to the Commissioner of Income-tax having
jurisdiction over the institution or fund along with the following documents :
(i) Copy of registration granted under section 12A or copy of notification issued under section 10(23) or section 10(23C).
(ii) Notes on activities of institution or fund since its inception or during the last three years, whichever is less.
(iii) Copies of accounts of the institution or fund since its inception or during the last three years, whichever is less.





FAQ
What is section 12-A of Income Tax Act. ?
Income of an organization is exempted if NGO has 12-A registration. All income shall not be taxable after 12-A registration. This is one time registration.
What Is section 80-G of Income Tax Act. ?
If an organization has obtained certification under section 80-G of Income Tax Act then donors of that NGO can claim exemption from Income Tax. This is not one time registration. This needs to get renewed after validity period.
FAQ
Q. When an organization can apply for registration under section 12A and BUG of Income Tax Act?
A. Application for registration under section 12A and 80G can be applied just after registration of the NGO.
Where to apply for registration under section 12A and 80G of Income Tax Act?
Application for registration under section 12A and 8OG can be applied to the Commissioner of Income-tax (Exemption) having jurisdiction over the institution.
Can both the applicatlons under section 12A and 80G of Income Tax Act be applied together?
Yes ! Both applications can be applied together or it can also be applied separately also. If some organization is willing to apply both applications separately, then application for registration u/s 12A will be applied first. Getting 12A registration is must for applying application for registration
u/s 80G of Income Tax Act.
Generally what is the timeline for getting registration under section 12A and 80G of Income Tax Act?
If application for registration under section 12A and 80G will be applied through NGO Factory, it should take 3 to 4 months.
What is the procedure for getting registration under section 12A and 80G of Income Tax Act?
Step-1: Dully filled-in application will be submitted to the exemption section of the lncome Tax Department.
Step-2: NGO will receive notice for clarifications from Income Tax Department in 2-3 months after applying.
Step-3: Reply of notice will be submitted by the consultant along with all relevant desired documents to the Income Tax Departments.
Step-4: Consultant will personally visit the Income Tax Departments to follow-up the case on behalf of the applicant organization.
Step-5: Exemption Certificates will be issued.
What is the validity period of the registration under section 12A and 80G of Income Tax Act?
12A registration : Lifetime validity
80G registration : 1 to 3 years validity
What application forms are being used for applying for registration under section 12A and 80G of Income Tax Act?
12A registration : Form 10A
80G registration: Form 10G (For New Application and Renewal both)
What are the conditions on Section 80G?
There are few conditions to be fulfilled under the section 80G:
• The NGO should not have any income which are not exempted, such as business income. lf, 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.
What is Tax Exemption limit on donations?
There is a limit on how much money can be exempted from the Income Tax.
• If the amount of deduction to a charitable organisation or trust is more than 10% of the Gross Total Income computed under the Act (as reduced by income on which income-tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), then the amount in excess of 10% of Gross Total Income shall not qualify for deduction under section 80G.
• The persons or organisation who donate under section 80G gets a deduction of 50% from their taxable income. Here at times a confusion creeps in, that the tax advantage under section 80G is 50%, but actually it is not so. 50% of the donation made is allowed to be deducted from the taxable income and consequently tax is calculated.
• The ultimate benefit will depend on the tax rates applicable to the assessee. Let us take an illustration. Mr. X an individual and M/s. Y Pvt. Ltd., a Company both give donation of Rs.1,00,000/- to a NGO called Adarsh. The total income for the year 2003-2004 of both Mr. X and Ms. Y Pvt. Ltd. is Rs. 2,00,000/-. Now assuming that the rates are 30% for the individuals and 40% for the Companies without any minimum exemption limit.
Documents reguired for registration u/s 12A AND 80G:
1. Dully filled in Form - 10A for registration u/s 12A registration;
2. Dully filled in Form - 10G for registration u/s 80G registration;
3. Registration Certificate and MOA /Trust Deed (two copies - self attested by NGO head);
4. NOC from Landlord (where registered office is situated);
5. Copy of PAN card of NGO;
6. Electricity Bill / House tax Receipt /Water Bill (photocopy);
7. Evidence of welfare activities carried out & Progress Report since inception or last 3 years;
8. Books of Accounts, Balance Sheet & ITR (if any), since inception or last 3years;
9. List of donors along with their address and PAN;
10. List of governing body I board of trustees members with their contact details;
11. Original RC and MOA /Trust Deed for verification;
12. Authority letter in favor of NGO Factory;
13. Any other document I affidavit / undertaking I information asked by the Income Tax department



INCOME TAX - PRIVILEGES TO THE DONORS U/S 80G

INTRODUCTION
01 As we already know that an 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.
REGISTRATION UNDER SECTION 80G
02 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.
DOCUMENTS TO BE FILLED WITH FORM 10G
03 The application form should be sent in triplicate to the Commissioner of Income Tax alongwith the following documents :
i) copy of income tax registration certificate.
ii) detail of activities since its inception or last three years whichever is less
iii) copies of audited accounts of the institution/NGO since its inception or last 3 years whichever is less.
CONDITIONS TO BE FULFILLED UNDER SECTION 80G
04 For approval under section 80G the following conditions are to be fulfilled :
i) 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.

ii) 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.

iii) the NGO is not working for the benefit of particular religious community or caste.

iv) the NGO maintains regular accounts of its receipts & expenditures.

v) 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.

EXTENT OF BENEFIT
05 There is ceiling limit upto which the benefit is allowable to the donor. If the amount of deduction to a charitable organisation or trust is more than 10% of the Gross Total Income computed under the Act (as reduced by income on which income-tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), then the amount in excess of 10% of Gross Total Income shall not qualify for deduction under section 80G.
In other words, while computing the total income of an assessee and for arriving at the deductible amount under section 80G, first the aggregate of the sums donated has to be found out. Then 50 per cent of such donations has to be found out and it should be limited to 10 per cent of the gross total income. If such amount is more than 10 per cent of the gross total income, the excess will have to be ignored.
IILUSTRATION OF BENEFITS UNDER SECTION 80G
06 The persons or organisation who donate under section 80G gets a deduction of 50% from their taxable income. Here at times a confusion creeps in, that the tax advantage under section 80G is 50%, but actually it is not so. 50% of the donation made is allowed to be deducted from the taxable income and consequently tax is calculated.
07 The ultimate benefit will depend on the tax rates applicable to the assessee. Let us take an illustration. Mr. X an individual and M/s. Y Pvt. Ltd., a Company both give donation of Rs. 1,00,000/- to a NGO called Satyakaam. The total income for the year 2003-2004 of both Mr. X and Ms. Y Pvt. Ltd. is Rs. 2,00,000/-. Now assuming that the rates are 30% for the individuals and 40% for the Companies without any minimum exemption limit. The tax benefit would be as shown in the table :
Mr. X MS. Y Pvt. Ltd.
i) Total Income for the year 2003-2004 2,00,000.00 2,00,000.00
ii) Tax payable before Donation 60,000.00 80,000.00
iii) Donation made to charitable organisations 1,00,000.00 1,00,000.00
iv) Qualifying amount for deduction (50% of donation made) 50,000.00 50,000.00
v) Amount of deduction u/s 80G (Gross Qualifying Amount subject to a maximum limit 10% of the Gross Total Income) 20,000.00 20,000.00
iv) Taxable Income after deduction 1,80,000.00 1,80,000.00
v) Tax payable after Donation 54,000.00 72,000.00
vi) Tax Benefit U/S 80G (ii)-(v) 6,000.00 8,000.00
Note : The tax rates and mode of computation is not actual


INCOME TAX - PRIVILEGES TO THE DONORS U/S 35AC

INTRODUCTION
01 As we already know that an NGO can avail income tax exemption by getting itself registered and complying with certain other formalities, but such registration doesn't provide any benefit to the persons making donations. The Income Tax Act has certain provisions which offer tax benefits to the "donors". All NGOs should avail the advantage of these provisions to attract potential donors. Section 35AC is one of such sections.
REGISTRATION UNDER SECTION 35Ac
02 The Central Government approves certain NGOs and notifies them as eligible for project or schemes for the purposes of section 35AC. If an NGO succeeds in getting such an approval for its projects then it stands a very good chance of mobilising funds from the corporate and the business sector. Business houses making contribution to such approved projects are allowed the benefits of deducting such contribution as expenditure.
NATIONAL COMMITTEE
03 The Central Government has constituted a National Committee to identify projects and schemes to be notified under section 35AC, such committee normally consists of eminent persons. All NGOs are entitled to apply to the National Committee to get its projects or schemes approved.
WHERE THE APPLICATION IS TO BE MADE
04 The application for approval by the National Committee should be made to the Secretary, National Committee for Promotion of Social & Economic Welfare, Dept. of Revenue, Govt. of India, North Block, New Delhi - 110001.
THE APPLICATION AND ITS ENCLOSURE
i) The application is to be made in 2 Sets, written either in Hindi or English.
ii) Details such as name, address and status of applicant, the district/ ward circle where assessed/PAN number.
iii) Audited Balance Sheet, Profit& Loss Account or Income& Expenditure Account for the latest year and two preceding years.
iv) How is it constituted i.e. whether as a trust, society, etc supported by relevant documents like trust deed, rules & regulation, memorandum of association etc. and registration certificate, if any.
v) Name & Addresses of the persons managing the affairs of the association or institution, including those who left the organisation but were managing the affairs of the association or institution during the 3 years preceding the date of application.
vi) If the association or institution is notified under section 10(23)(C) or is approved for the purposes of section 80G, the particulars of such approval granted.
vii) Brief particulars of the activities of the association or institution during 3 years preceding the date of application or since inception if the association or institution is less than 3 years old.
viii) Such other information as the association or institution may like to place before the National Committee.
ADDITIONAL INFORMATION REGARDING THE PROJECT/SCHEME TO BE SUBMITTED
(i) Title of project or scheme;
(ii) Date of commencement;
(iii) Duration and the likely date of completion;
(iv) Estimated cost of the project ;
(v) Category or class of persons who are likely to be benefited from the project or scheme;
(vi) Affirmation that no benefit from the project or scheme other than remuneration or honorarium, will accrue to persons managing the affairs of the NGO ;
(viii) Such other particulars as the applicant may place before the National Committee.
CERTIFICATE TO BE ISSUED TO THE DONOR
05 All approved NGOs are required to issue a certificate to the donor for all contributions & receipts under section 35AC. The certificate is to be issued in Form 58A.
06 This certificate will enable the donor to claim exemption from its taxable income. Further, the NGOs should also send an Annual Report to the National Committee indicating the progress of the work relating to the project/scheme and the following informations in respect of each contributor :
i) name of the contributors & their addresses.
ii) PAN.
iii) amount of contributions.
iv) the project/scheme for which the contribution is made.
v) total amount of contribution received during the year.
vi) total cost of the project approved by the National Committee.
07 Such Annual Report should reach the National Committee by 30th June, following the financial year in which the amount is received.
DEDUCTION OF CONTRIBUTION UNDER SECTION 80GGA
08 Section 35AC is available to assessees who have income from the head ‘business’ or ‘profession’. Therefore, for the assessees who do do not have income from business or profession, section 80GGA provides for deduction on donations made to eligible projects under section 35AC. Section 80GGA, is a broader section and deductions are also available for contributions made for scientific research under section 35CCA & 35CCB, which have been withdrawn. 100 per cent deduction is available under section 80GGA, subject to the available gross total income under section 80A. Therefore, unlike section 35AC, deduction under section 80GGA cannot be carried forward in the form of losses to next year .
OVERALL SUMMARY
09 To sum up the discussions :
i) Under section 35AC, organisations having income from business or profession can get 100 per cent deduction. Charitable Organisations can get registered themselves u/s. 5AC by applying to the National Committee under rule 11F to 11-O, if they are carrying on any business.
ii) The Central Goverment has specified various types of projects of national needs for which Charitable Organisations can make donations.
iii) Business houses making donations for the purpose of section 35AC, should be careful that the donee organisation continues to enjoy approval u/s. 35AC. As the approval under section 35(AC) is not permanent in nature.
iv) To get approval u/s. 35AC two sets of application have to be made alongwith specified enclosures to secretary of National Committee, New Delhi.
v) The National Committee may recommend or reject the project but when the approval is recommended then it is for a period of maximum 3 years and it could be further extended if the National Committee is satisfied with the performance during the period.
vi) A certificate has to be issued to the donor in Form 58A. This certificate will enable the donor to claim exemptions.
vii) The National Committee may withdraw the approval if the project is not carried out in accordance with the approved conditions. To withdraw a project National Committee should provide an opportunity of being heard to the aggrieved organisation.
viii) Section 35AC provides deduction from income from business and profession. Similar deduction is also available u/s. 80GGA, for assessees having income from other heads.

AUDIT & FILING OF RETURN

REQUIREMENT OF AUDIT REPORT
01 Section 12A states two conditions for availing the exemption available under the Act, the first condition is regarding application for registration and the second condition is regarding audit by an accountant as defined in the Explanation below sub-section (2) of section 288. All organisations are required to apply for registration within one year from the date of their creation. If there is delay in applying for registration then the organisation should submit Audit Reports for the past three years or as may be available.
MONETARY LIMIT
02 As per the Taxation Laws Amendment Act, 2006, w.e.f. 1st April 2006, it is mandatory for every organisation to get its account audited where its income exceeds the minimum exemption limit. (As per the Finance Act 2008, presently the minimum exemption limit is Rs.1,50,000)
03 The implication of section 13(3) is extensive and therefore it may not be possible on the part of the Auditor to make independent inquiries. Therefore the Auditor before certifying the annexure to Form 10B should ensure and also clearly state the scope of his work and the responsibilities owned. It is important that the Auditor should mention in its report that the details of the persons covered under section 13(3) were provided by the Trustees of the Trust or the functionaries of the organisations.
FILING OF RETURN
04 All Charitable Organisations having income exceeding Rs. 50,000 during the previous year are required to file their return of income. The ‘income’ for the purposes of filing the return should be computed without giving effect to the provisions of sections 11 and 12 of the Act. Such returns are to be filed with the Income-Tax Officer or the Assessing Officer under whose local jurisdiction they fall. The return is to be filed as per the provisions of section 139(4A) and (4C) in the manner provided in section 139 of the Act.
FILING OF RETURN MADE MANDATORY
05 The Finance Act, 2002 has inserted sub-section (4C) to section 139 making it mandatory for the organisations registered under section 10(21), 10(22B), 10(23A), 10(23B), 10(23C) etc. to file Annual Returns under section 139(1). Earlier no clear provision for filing of return by these organisations was available, and it was not very clear whether these organisations were required to file returns or not, though Bombay High Court held in a case that returns are required to be filed. Now this controversy seems to be resolved.
FORMS AND DUE DATES
06 All Organisations or Trusts are required to file the return in Form No. 3A by the 30th September of the assessment year. The return must be accompanied by an Audit Report in Form 10B prescribed under Rule 17B of the Income-Tax Rule, 1962.
FILING OF RETURN BY UNREGISTERED ORGANISATIONS
07 Organisations which are not registered under the provisions of the Act, do not enjoy any exemption on their income hence, they are liable to file a return if the voluntary contribution received by them or their income exceeds Rs. 50,000. Such organisa-tions should file their income-tax return in Form No. 2, if the income includes “business income” or in Form No. 3, if the income does not include “business income”.
DELAYED SUBMISSION OF RETURN OF INCOME
08 An organisation which fails to furnish its return of income within the due date can still submit its return of income any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier. For instance, a return of income for the financial year 2001-2002 can be submitted upto 31st March, 2004.
09 Under section 272A(2)(e), any Voluntary Organisation which fails to furnish the return of income which it is required to furnish under sub-sections (4A) and (4C) of section 139 or fails to furnish it within the time allowed and in the manner required under that sub-section, it shall pay by way of penalty a sum of Rs. 100 for everyday during which the failure continues. Before imposing such penalty, an opportunity of being heard shall be given to the organisation.
DOCUMENTS TO BE ATTACHED WITH THE RETURN
10 One set of the following documents are required to be attached with the return :
(i) Audit Report in Form 10B.
(ii) Balance Sheet.
(iii) Income and Expenditure Account.
(iv) Receipt and Payment Account.
(v) Copy of the Registration Certificate.
(vi) In case the organisation has accumulated income, resolution for accumulation.
(vii) Form 10 in which application for accumulation is made.
REVISION OR CORRECTION OF MISTAKES
11 The concerned organisation can file a revised return at any time before the expiry of one year from the end of the assessment year or completion of the assessment whichever is earlier only if there is any mistake or omission in the return. For instance, if the financial year for which the return is filed is 2001-2002 then a revised return can be submitted any time on or before 31st March, 2004, provided the assessing officer has not completed the assessment in the intervening period.
OVERALL SUMMARY
12 To sum up the discussions
(i) Registration under Income Tax Act, is a mandatory requirement to claim exemptions.
(ii) Registration is only a pre-condition for exemption. But, in order to claim exemptions, compliance of other provisions and conditions is necessary.
(iii) Application in Form 10A, in duplicate is required to be made to Commissioner of Income Tax.
(iv) The time limit for making such application is one year from the date of creation of the organisation.
(v) If the application is filed after the time limit, the C.I.T can condone the delay after satisfying himself that there were sufficient reasons which existed for delay.
(vi) If the delay is not condoned then the organisation will be eligible for exemptions from the first day of the financial year in which the application is filed.
(vii) It has been held in various case laws that an organisation once found eligible for registration should normally qualify for registration from the date of its creation. This issue remains debatable.
(viii) The C.I.T, on receipt of application, shall call for such documents and information as he thinks necessary to determine the genuineness of the organisation.
(ix) The C.I.T has to make an order in writing within six months from the end of the month in which the application is made.
(x) If the C.I.T wants to reject the application for registration, then a reasonable opportunity of being heard should be provided to the applicant.
(xi) Though the time limit of six months for processing an application is prescribed,there is no provision with regard to the delay made in processing the application.
(xii) There is no provision in the Act for withdrawal of registration once granted. Therefore, registration once granted is permanent in nature.
(xiii) If the application for registration is rejected then the aggrieved organisation can file an appeal against such order to the Appellate Tribunal under section 253.
(xiv) The time limit for filing an appeal to the Tribunal is 60 days from the date on which the order is received.
(xv) Under section 12A, all Charitable Organisations have to get their accounts audited if the total income exceeds Rs. 50,000/-. Such Audit Report has to be in Form 10B.
(xvi) Further, all Charitable Organisations having total income exceeding Rs. 50,000/- during the previous year are required to file their return of income. The return of income is required to be filed in Form 3A, as per the provisionsof section 139(4A) & (4C).
(xvii) Even unregistered organisations which do not enjoy any exemptions are required to file return if their income exceeds Rs. 50,000/-. Such return should be filed in Form 2 or in Form 3, if the income does not include business income.
(xviii) An organisation can submit a delayed return under section 139(4), any time before the expiry of one year from the end of the relevant assessment year.
(xix) An organisation can file a revised return at any time before the expiry of one year from the end of the relevant assessment year or completion of the assessment whichever is earlier only if there is mistake or omission in the return.
(xx) One set of the following documents are required to be attached with the return :
(a) Audit Report in Form 10B.
(b) Balance Sheet.
(c) Income and Expenditure Account.
(d) Receipt and Payment Account.
(e) Copy of the Registration Certificate.
(f) In case, the organisation has accumulated income, resolution for accumulation.
(g) Form 10 in which application for accumulation is made.