Tax exemptions for NGOs under IT Act 1961

1. THE INCOME TAX ACT 1961
Tax Reliefs for NGOs ( Societies , Trusts , section 8
Company )
Dr. Renuka Asagi

2. Introduction
 Income tax was first introduced in India in 1860. In
those days income related with charitable purposes
were totally exempt from tax. Over the years the
Income Tax Act underwent radical changes.
 basically to ensure that such exemptions are not
misused by unscrupulous elements
 Generally the Trusts and societies are formed for the
benefit of the general public at large or for benefit of
a particular section of people in the society

3.  many trusts and societies are involved in Poverty
alleviation programs, Medical assistance, Education,
adult literacy and other community development
programs. Generally they work without any profit
motive and their main focus is to serve the
community
 The Government of India has extended various tax
reliefs, in order to support them in their effort to bring
in social and economic transformation among the
poor in the country. In this unit we will look at those
tax concessions extended to them

4. Tax Exemption for NGOs of Income
Tax Act ( 100 % )
 Application for Registration
 In order to claim exemption. an NGO should make an
application to the Commissioner of Income Tax for
registration of the NGO. Such application is to be made
in Form 10A. The following documents are required to
be submitted
 1) Form 10A & 12A
 2) The original instrument under which the NGO is
established, or the Bye Laws & MOA
 3) Two copies of the Accounts of three previous years
should be enclosed. Where the NGO was not in
existence in any of three prior years, copies of the
accounts of lesser number of years may be submitted. "

5. Time Limit for Making an
Application
 The application for registration should be made
before expiry of one year from the date of creation
of the NGO.
 If NGOs which make a delayed application are
allowed exemption' with effect from the 1st day of the
financial year in which 1 application is made.
 Commissioner of Income Tax has the power to
forgive the delay in submitting the application
 Income tax privileges to the Donors ( U/S 80G )

6. The Authority to Whom Application is to be Made
 The application is to be submitted under Income Tax -
Registration Procedure to the Commissioner of
Income Tax in whose area the NGO is located.
 Applications are to be made to the Director of-Income
Tax (Exemption).

7. Trusts Eligible for Exemption
 85% of there income should spend for their objects.
 Charitable or religious trusts are entitled to
exemption from Tax
 Trust Created before 1-4-1962
 charitable purpose of promoting international
welfare in which India is interested
 Charitable trusts created for the benefit of scheduled
castes, tribes, backward classes or women and
children

8. Trusts Not Eligible for Exemption
trusts are not eligible for exemption under Section 11
and 12
 A trust for private religious purpose, which ensures
no public benefit
 benefit of any particular religious community or case
 A trust should not cross section 13(3) of IT Act – No
benefits for Founder
 No Exemptions from TDS

9. Income tax privileges to the Donors ( U/S 80G )
 If any NGO( Society, Trust, Section 8) gets itself
registed under section 80G
 The person or Org making a donation to the NGO,
he will get tax deduction of 50% from his/ its taxable
income.

10. Documents required under S-80G
 The application form should be sent in triplicate to
the Commissioner of Income Tax along with the
following documents
 Copy of income tax registration certificate
 Detail of activities since its inception or last three
years whichever is less
 Copies of audited accounts of the institutionMG0
since its inception or last 3 years whichever is less.
 After it will take time to 2-3 years to get certificate.

11. Extent of Benefit
 If donor claiming Tax exemption, it is applicable for
10% of his gross income

12. Under section 35AC ( Notional Committee
)
 As per IT act rules NGO should not provide any
benefit for the Donors
 All approved NGOs are required to issue a certificate
to the Donor for all contributions and receipts
 Form 58 A certificate should provide to donor for
claim Tax exemptions

13. Tax Exemptions for section – 8
Company
 Tax Exemptions for Donors ( 80G)
 No minimum capital requirement
 No stamp duty is payable
 Separate legal Entity
 Credible ( Authorized by CG and RD)
 No title required ( before or after Add)

14. Thank
You