Registration u/s Sec. 80G & 12 A
Registration & Rejection
CA Nandkishor Malpani
NVM & Associates
Chartered Accountant,
Ramkunj, Railway Station Road,
New Osmanpura, Aurangabad -431005
Ph: 0240-2326106 M: 9823388620
Introduction
•Deduction of donation made is governed by Sec. 80G of the
IT Act, 1961.
•Deduction is allowed if the payments is made to certain
registered societies or funds.
•This is one of the incentive provided to the people to donate
for a noble cause.
•The NGO, who wants to express their gratitude to the donors,
should obtain registration u/s 80G.
What is Sec 80 G?
•Section 80G of the I.T. Act, 1961 enables an assessee to claim deduction
for donation made by him to certain organizations. This deduction is
subject to certain conditions.
• a. The organization receiving the donation should be registered or
noted u/s 80G.
• b. The amount of donation is deductible 50% or 100%, max. to the
extent of 10% of G.T.I. (except noted funds)
What are those noted funds or
Institutions
•National Defence Fund set up by CG
•Jawaharlal Nehru Memorial Fund
•Prime Minister’s Drought Relief Fund
•Prime Minister’s National Relief Fund.
•Prime Minister’s Armenia Earthquake Relief Fund
•Africa Fund
•National Children Fund
•Indira Gandhi Memorial Trust
•Rajiv Gandhi Foundation
•National foundation for communal harmony
•An approved University/Education institution
Noted Funds (contd..)
•The Maharashtra Chief Minister’s Earthquake Relief Fund
•any fund set up by the State Government of Gujarat exclusively for providing
relief to the victims of earthquake in Gujarat
•Zila Saksharta Samiti
•National Blood Transfusion Council or to any State Blood Transfusion
Council
•fund set up by a State Government to provide medical relief to the poor
•Central Welfare Fund for the Army, Indian Naval Benevolent Fund or the Air
Force established by the armed forces
•Andhra Pradesh Chief Minister’s Cyclone Relief Fund
•National Illness Assistance Fund
•Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund
•National Sports Fund or National Cultural Fund or Fund for Technology
Development and Application
•National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental
Retardation and Multiple Disabilities
Limit of 10% of G.T.I. is not applicable for the donations made all above funds
Registered Institutions
Any charitable Institution can get registered for the purpose of Sec.80G
on satisfying following conditions:
•1. The institution is eligible for registration
•2. It follows the prescribed procedure of registration
•3. It submits the required documents
•4. It satisfies the registration authority (CIT)
•5. CIT has not rejected / denied the registration
Eligibility
To be eligible for registration the following conditions are to be
satisfied:• The Institutions should not spend any income or assets for any
purpose other than a charitable purpose.
•The Institution should not be for the benefit of any particular
religion, community, or caste.
•The Institution should maintain regular accounts.
•The Institution should be registered under the Societies
Registration Act or any other similar welfare Act.
•Their expenses on religious activity should not exceed 5% of total
income.
•They should submit their income tax return regularly.
Procedure For Registration
Procedure to get your society registered.
•Application in Form No. 10G should be sent in triplicate to CIT, which
requires the following important information :•Name and Address of the Institution.
•Name and Address of the trustees / office bearers.
•Income tax Particulars.
•Amount of surplus and mode of their investments.
Documents Required With Form 10 G
This application should be accompanied with the following documents:•Copy of the registration granted U/s 12A.
•A note on the activities of the institution for the last three years.
•Copy of the audited accounts for the Past three years.
•Memorandum and Rules & Regulations.
•Copy of the registration Certificate of the society.
• List of Donors above Rs.5,000 with addresses
• Details of income and interest paid above Rs.2,500
•Copy of Trust deed.
•Declaration by the trustees of being not disqualified u/s 13(1)
Procedure followed by IT Department
•CIT may call for further information or cause such inquiries /inspection
as he deems necessary to satisfy himself.
•If CIT satisfied that all conditions are fulfilled, he shall grant approval.
•CIT will grant registration within six months of submission of
application, if he fails to grant/reject it shall be presumed that the
registration is granted.
Procedure followed by IT Department
•Verification of Genuineness of the trust is not restricted to Sec. 12A
•Deep scrutiny of the proposal by I.T. Dept. is must as now the 80G is
issued perpetually. And even International funds are procured by the trust.
•Scrutiny of financial documents such as Receipt Books, Cash Books, etc.
plays important role to decide the genuineness of the trust.
In case of rejection, notice shall be sent indicating the specific reason for
the same, after giving an opportunity of being heard to the assessee.
Whether non attendance is equivalent to not being heard.
Reasons for rejection of application for registration u/s 80G can not be
beyond non compliance of clauses (i) to (vi) of sec. 80G(5) & sec. 2(15) of I.T
Act.
Clause u/s 80G(5) Of IT Act
Following shall result in rejection of application.
•Institution does not maintain separate books of account where it
derives any income being profits & gains of business.
•The Institution does not maintain regular accounts
•The bylaws or objectives of the Institution are not specific about
spending its income or assets for purposes other than charitable.
• Institution does not issue certificate to person making donation that it
maintains separate books of account & that it will not use such
donations for the purpose of such business.
• Institution uses the income derived for purpose other than charitable
purpose
Cont…….
•The Institution is for the benefit of any particular religion, community,
or caste.
•The Institution is not registered under the Societies Registration Act or
any other similar welfare Act.
•The donations received by institution are used directly or indirectly for
the purpose of such business.
SEC 2 (15) of I.T ACT
Section 2(15) of the Income Tax Act, 1961 (‘Act’) defines
“charitable purpose” to include the following:(i) Relief of the poor
(ii) Education.
(iii) Medical relief.
(iv) Preservation of environment.
(v) Preservation of monuments or places or
objects of artistic or historic nature.
(vi) the advancement of any other object of
general public utility.
Denial Of Registration
•Registration u/s 80G(5)(vi) cannot be denied to charitable trust even
if it is running some activity that yields profit.
CASE LAW DETAILS: Decided by: ITAT, BANGALORE BENCH `B’,
In The case of: Prasanna Trust v. DIT (Exemption)
Appeal No: ITA No. 1391/Bang./2008
Decided on: June 12, 2009
Denial Of Registration
Can the Registration u/s 80G be denied to charitable trust in
following conditions :
•Non-submission of list of donors above Rs.5,000
•Spending of trust is not more than 85% of receipts; And application
for accumulation is not submitted in Form 10.
•Return of Income is not filed
•Resolution of accumulation is not submitted
•PAN of trustees are not submitted
Denial Of Registration
Can the Registration u/s 80G be denied to charitable trust in following
conditions :
•ITRs of Trustees are not submitted.
•Trust money is advanced to a firm in which trustee(s) is interested.
•During inspection at sight the inspector could not find any
administrative set-up at given address.
•Employee(s) of the trust is relative of trustees. {40A(2)(b)}
Denial Of Registration
Can the Registration u/s 80G be denied to charitable trust in following
conditions :
•Shot term receipts are used for long term expenses.
•Rate of Interest of unsecured loan taken from trustees are higher than
bank rate
•In the opinion of CIT, if concessional charges are recovered from the
service availers will not amount to charity
Denial Of Registration
Can the Registration u/s 80G be denied to charitable trust in following
conditions :
•In the opinion of CIT, if the discrimination is made in charging to
service availers will not amount to charity
•Religious expenses are more than 5% of total expenses.
•In the opinion of CIT, Substantial exp. incurred on renovation of the
temple is religious exp.
Some Important Points
•Even if the CIT denies the registration u/s 80G, the rejection order is
now appeal able.
•Deduction u/s 80G is not available to the donor of in kind offerings.
•If the trust is having business directly related with the object of the
trust and turnover of the business is more than Rs.60 Lacs, whether tax
audit will require?
•If application of the funds by the trust is less than 85% on its object,
then what are the rate of tax and what is the exemption limit to the
trust?
Renewal For Approval
•If the 80G approval is existing as on 01/10/2009 it need not be renewed.
•Approval is deemed to have been continued unless it is cancelled by
the Income tax authority.
•This amendment is as a consequence to the omission of the proviso to
clause (vi) of section 80G(5) by The Finance (no.2)Bill,2009.
Contact:
CA Nandkishor Malpani,
NVM & Associates,
Chartered Accountants,
“Ramkunj”, Railway Station Road,
New Osmanpura, Aurangabad-431005
Mobile No.: 9823388620
Office:0240-2326106
E-mail ID: [email protected]
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