- What is section 80G of Income tax Act, 1961.
Whenever any donation has been made to any trusts/institution registered under section 80G then such donation can be claimed as deduction by the assessee. For claiming such donation as deduction there are some conditions such as
- Donation exceeding in cash exceeding Rs 2,000 will not be allowed as deduction.
- The donations above Rs 2,000 should be made in any mode other than cash to qualify as a deduction under section 80G.
- Donation should not be in kind.
- Whether there is any change in respect of provision relating to registration of trust/institution under section 80G?
Trust which are already registered and approved under Section 80G.
Charitable trusts and exempt institution which are already registered under section 80G of Income Tax Act, 1961 will now be required to reapply online for registration the provision will come into implementation from 1st October, 2020.
Trust which are not registered under 80G but want to apply for fresh registration
Such Trust shall apply for registration at least one month prior to the commencement of the previous year relevant to the assessment year for which approval is sought. Say for Example if a trust wants to sought registration for the Previous year 2021-22 (AY 2022-23) then such trust shall make application at least one month prior to the comment of the previous year i.e. before 01st March 2021.
- What is the time limit for trust already registered under Section 80G to applying for re-registration?
Trust which are already registered and availing benefit under Section 12A or 12AA shall apply for registration before 31st December 2020.
- Under which Section the trust shall apply for registration and what is the validity period if registration is granted?
It is provided in section 12AB that where the trust or institution is already registered under section 80G and on an application is made for registration, registration shall be granted by the Principal Commissioner or the Commissioner by passing an order within a period of three months from the end of the month in which the application was received and such registration shall be valid for a period of 5 years.
- What are the consequences if trust which are already registered does not apply for fresh registration within the prescribed time limit?
This amendment will require every trust or institution which are already registered to apply again and in case such application is not made, then, by implication, the registration shall stand cancelled on the expiry of three months i.e. 31st December, 2020; with the consequence that any assessee donating to such trust or institution shall not be eligible for claiming deduction under section 80G of the Act.
- How the trust will fall into the category of “Trust having Provisional Registration”?
Provisional registration will be granted to trust till the time final approved registration is received by the trust from Principal Commissioner or Commissioner. Say for example a trust has applied for fresh registration one month prior to Previous year for which benefit under Income Tax for charitable trust is sought for. As per the prescribed time limit the trust shall receive approval or rejection order within one month from the end of the month in which application was made. Now if the trust didn’t receive any kind of order, in that scenario Trust shall again make the application for registration as they would be under the category of
“Trust having Provisional registration”.
- What is the time limit for trust to apply for registration in case the trust is under Provisional Registration?
Such trust shall make application for registration within Six Months from the commencement of activities or six months prior to the expiry of provisional registration, whichever is earlier.
- To whom the trust shall apply for registration?
The trust shall apply for registration to Jurisdictional Commissioner or Principal Commissioner. Such application shall be made online and the procedure will be notified by the Income Tax Department.
- What is the time limit within which trust shall be granted registration for the application made by the trust?
For existing trust applying for registration, the order shall be passed by Principal Commissioner or commissioner within three months from the end of the month in which application for registration was received was received by relevant authority.
For new trust applying for fresh registration, the order shall be passed by Principal Commissioner or commissioner within one month from the end of the month in which application for registration was received was received by relevant authority.
For other registration which includes (trust under provisional registration or trust whose registration period is expired) the time limit is six months from the end of the month which application for registration was received by relevant authority.
- What are the documents which are required to be submitted for registration of trust under Section 80G?
Following documents are required for registration of trust under Section 12AB
- Self-certified copy of-
(a) the instrument/document evidencing the creation or establishment of the fund or institution, being the applicant, such as, memorandum of association, articles of association, trust deed, rules/regulations of applicant and those of other institutions like schools, hospitals, etc., managed by the applicant, as applicable;
(b) certificate of registration with Registrar of Companies/Firms/Societies/Public Trusts etc, wherever applicable;
(c) accounts and balance sheet (audited accounts and balance sheet along with the audit report, where audit is required under the relevant laws) for the preceding three previous years or since inception, whichever is less; along with a note on the activities as reflected in the accounts and the annual reports with special reference to the appropriation of income towards purposes of the applicant, if applicable;
(d) order granting approval under sub-clause (iv), sub-clause (v), sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, as the case may be, if any;
(e) order granting registration under section 12A or section 12AA, as the case may be, if any;
(f) order rejecting the application for grant of approval under section 80G, if any; (g) order cancelling the registration granted under section 80G, if any; and (h) application in case applied for approval under sub-clause (iv), sub-clause (v), sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 or for registration under section 12AA, as applicable.
- Note on the activities of the applicant.
- Whether Trust registered under 80G is required to carry-out any other procedure?
The charitable/religious trusts institution etc. shall file a statement of receipts of donation to the Income tax authority. Also, the charitable/religious trusts institution etc. will be required to furnish the donor, a certificate specifying the of donation, containing such particulars and on the basis of which donor will be provided with deduction under 80G directly in the return of income on the basis of the prescribed statements.
- Frequently asked questions:
Question: Which Online Form needs to be filed for Annual Statement of Donation?
Answer: The Form needs to be filed Online by the person authorized by Trust or Entity within such time as maybe prescribed by the Income Tax Department. The Income Tax Department has not yet come out with guidelines or forms for the same.
Question: Can Trust Entity Revised the Annual Statement of Donation?
Answer: If Annual Statement of Donation contains any mistakes or there is a need for any addition or updation of information in the same then a correction statement can be filed like we file revised Income Tax and TDS Returns.
Question: What if Trust or Entity Fail to File Annual Statement of Donation?
Answer: In case there is a delay in filing according to section 234G late fee of Rs. 200/- per day shall be applicable. Further a penalty of Rs. 10,000/- which may go up to Rs. 10,00,000/- can be levied as per section 271K.
Question: What is the information that is to be given under annual statement filed by such trust or exempt institute?
Answer: The information in the ASD should generally contain the donor details such as the Name, Address, PAN Number, Aadhar Number and Amount donated. Donors will get deduction only based on ASD filed by the Trust.