- Date : 27/04/2023
- Read: 4 mins
Find out what the new certificate required for claiming deductions on section 80G donations
There is happiness in giving, particularly when it makes someone else’s life better. Giving away or charity is known to have health benefits too. The government too, encourages us to engage more and more in charity. It incentivises this by offering tax deductions on selected donations.
If you want to enjoy a tax break for your generosity, you must check the list of donations that are eligible for 50% and 100% tax deductions under section 80G. If you donate to these selected recipients or planning to do so, you must know about the new mandatory certificate.
Also Read: Tax benefits available if your income is below Rs 5 lakh
The New Donation Certificate Rule
Until the introduction of the certificate, donors can claim tax deductions on the eligible donations while filing the Income Tax Return (ITR) by using the donation receipts. However, now the donor must enter the donation certificate details in the ITR form to claim the deduction made under section 80G. This TDS-like certificate must be downloaded by the institution receiving the donation from the income tax department’s e-filing portal.
Also Read: GST 101: What India’s biggest tax reform means for you
Annual Statement of Donation
The Finance Act 2020 made it mandatory for all 80 G-recognised institutions to furnish an annual statement which will provide details of the donations received by the institution. This statement in Form 10BD must be filed electronically on the department’s e-filing webpage. It is filed through an electronic verification code or digital signature and must be filed on or before 31 May of the year immediately preceding the financial year in which the donation was received.
If the organisation fails to furnish this annual statement, fees and penalties are levied on the donee institution. For each day’s delay in filing the statement, a late fee of Rs 200 will be charged from the organisation under section 234G. Besides, section 271K levies a penalty of Rs 10,000 to Rs 10,00,000 for the delay in filing.
Certificate Download and Use
The 80G donation certificate is granted to the non-profit organisation by income tax authorities. This certificate in Form 10 BE specifies the amount donated, and has been made effective from financial year 2021-22. This certificate allows the donors to claim tax deductions under action 80G.
Once the institution files the Form 10 BD statement, it can download the donation certificate from the e-filing portal. They will then provide the certificate to the donor on demand or proactively so that the donor can claim the tax deduction in his or her ITR.
Also Read: Re 1 can cost you Rs 25000 under the new income tax regime. Know how?
Donor’s Responsibilities
The donor must provide the necessary information to facilitate the smooth filing of the donation statement by the non-profit organisation or institution. As a donor, you must provide your name, address, and identity proofs like PAN, Aadhaar, tax identification number, passport number, voter ID, driving license, ration card number, etc. The purpose of the donation must also be specified by the donor.
For section 80G deductions, donations must be in monetary form and not in kind. The donation must be made in non-cash form, with cash donations allowed only up to Rs 2,000.
While filing the ITR, the donor must mention the donation reference number in schedule 80G of the ITR.
With this introduction, 80G deductions are now completely driven through electronically generated certificates. The certification process begins with the donor providing the necessary information to the donee, the donee furnishing the annual statement of donations to the income tax department and then downloading the donor-specific certificates. And finally, the tax deduction for the donation will be claimed by the donor based on this certificate.
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There is happiness in giving, particularly when it makes someone else’s life better. Giving away or charity is known to have health benefits too. The government too, encourages us to engage more and more in charity. It incentivises this by offering tax deductions on selected donations.
If you want to enjoy a tax break for your generosity, you must check the list of donations that are eligible for 50% and 100% tax deductions under section 80G. If you donate to these selected recipients or planning to do so, you must know about the new mandatory certificate.
Also Read: Tax benefits available if your income is below Rs 5 lakh
The New Donation Certificate Rule
Until the introduction of the certificate, donors can claim tax deductions on the eligible donations while filing the Income Tax Return (ITR) by using the donation receipts. However, now the donor must enter the donation certificate details in the ITR form to claim the deduction made under section 80G. This TDS-like certificate must be downloaded by the institution receiving the donation from the income tax department’s e-filing portal.
Also Read: GST 101: What India’s biggest tax reform means for you
Annual Statement of Donation
The Finance Act 2020 made it mandatory for all 80 G-recognised institutions to furnish an annual statement which will provide details of the donations received by the institution. This statement in Form 10BD must be filed electronically on the department’s e-filing webpage. It is filed through an electronic verification code or digital signature and must be filed on or before 31 May of the year immediately preceding the financial year in which the donation was received.
If the organisation fails to furnish this annual statement, fees and penalties are levied on the donee institution. For each day’s delay in filing the statement, a late fee of Rs 200 will be charged from the organisation under section 234G. Besides, section 271K levies a penalty of Rs 10,000 to Rs 10,00,000 for the delay in filing.
Certificate Download and Use
The 80G donation certificate is granted to the non-profit organisation by income tax authorities. This certificate in Form 10 BE specifies the amount donated, and has been made effective from financial year 2021-22. This certificate allows the donors to claim tax deductions under action 80G.
Once the institution files the Form 10 BD statement, it can download the donation certificate from the e-filing portal. They will then provide the certificate to the donor on demand or proactively so that the donor can claim the tax deduction in his or her ITR.
Also Read: Re 1 can cost you Rs 25000 under the new income tax regime. Know how?
Donor’s Responsibilities
The donor must provide the necessary information to facilitate the smooth filing of the donation statement by the non-profit organisation or institution. As a donor, you must provide your name, address, and identity proofs like PAN, Aadhaar, tax identification number, passport number, voter ID, driving license, ration card number, etc. The purpose of the donation must also be specified by the donor.
For section 80G deductions, donations must be in monetary form and not in kind. The donation must be made in non-cash form, with cash donations allowed only up to Rs 2,000.
While filing the ITR, the donor must mention the donation reference number in schedule 80G of the ITR.
With this introduction, 80G deductions are now completely driven through electronically generated certificates. The certification process begins with the donor providing the necessary information to the donee, the donee furnishing the annual statement of donations to the income tax department and then downloading the donor-specific certificates. And finally, the tax deduction for the donation will be claimed by the donor based on this certificate.
Source:
