Conditions to be fulfilled under Section 80G 

For approval under Section 80G the following conditions are to be fulfilled :
a)    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.
b)    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.
c)    the NGO is not working for the benefit of particular religious’ community or caste.
d)    the NGO maintains regular accounts of its receipts & expenditures.
e)    the NGO is properly registered under the Societies Registration Act 1860 or under any law corresponding to that act or is registered under section 8 of the Companies Act 2013.

Documents required:-

a)    Self-certified copy of incorporation document of Trust/Societies (created under instrument or otherwise)
b)    self-certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be;
c)    self-certified copy of FCRA registration, if the applicant is registered under such Act;
d)    self-certified copy of existing order granting approval under clause (23C) of section 10;
e)    In case of existing entities, copies of annual accounts for the period not exceeding 3 years immediately preceding the year in which the application is made
f)    Where the income of the entity includes profits and gains of business as per the provisions of sub-section (4A) of section 11, copies of annual accounts and audit report u/s 44AB for 3 years immediately preceding the year in which the said application is made
g)    Details of activities since its inception or last three years whichever is less.

Issuance of Certificate

On receipt of the application under 10A, the PCIT or CIT shall pass an order in writing granting approval in Form No. 10AC and issue a sixteen-digit alphanumeric Unique Registration Number (URN) to the applicants. The PCIT/ CIT  is also entitled to demand further documents from the applicant if the need for the same is felt, or may reject the application after giving an opportunity of being heard. The rejection order will also be passed in Form No. 10ACThe registration accorded to the NGO will be valid as per the new provisions of act amended through Finance Act 2020.

On receipt of application under 10AB, the order of registration or rejection or cancellation of registration shall be in Form No. 10AD and in case if the registration is granted, sixteen-digit alphanumeric number URN shall be issued by the PCIT or CIT. In this case also, PCIT/ CIT is entitled to demand further documents from the applicant to satisfy himself about the genuineness of activities of the trust or institution and the compliance of such requirements of any other law for the time being in force by the trust or institution as are material to achieve its objects.

List of donations eligible for 100% deduction without qualifying limit

National Defence Fund set up by the Central Government

Prime Minister’s National Relief Fund

National Foundation for Communal Harmony

An approved university/educational institution of National eminence

Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district

Fund set up by a state government for medical relief to the poor

National Illness Assistance Fund

National Blood Transfusion Council or any State Blood Transfusion Council

National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities

National Sports Fund

National Cultural Fund

Fund for Technology Development and Application

National Children’s Fund

Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory

The Army Central Welfare Fund or, the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996

The Maharashtra Chief Minister’s Relief Fund during October 1, 1993, and October 6, 1993

Chief Minister’s Earthquake Relief Fund, Maharashtra

Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of the earthquake in Gujarat

Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of the earthquake in Gujarat (contribution made between January 26, 2001, and September 30, 2001)

Prime Minister’s Armenia Earthquake Relief Fund

Africa (Public Contributions – India) Fund

Swachh Bharat Kosh (applicable from FY 2014-15)

Clean Ganga Fund (applicable from FY 2014-15)

National Fund for Control of Drug Abuse (applicable from FY 2015-16)

List of donations eligible for 50% deduction without qualifying limit

Prime Minister’s Drought Relief Fund

List of donations eligible for 100% deduction subject to 10% of adjusted gross total income

Donations to the government or any approved local authority, institution or association to be utilised to promote family planning

Donation by a company to the Indian Olympic Association or any other notified association or institution established in India to develop infrastructure for sports and games in India or sponsor sports and games in India.

List of Donations eligible for 50% deduction subject to 10% of adjusted gross total income

Any other fund or institution satisfies the conditions mentioned in Section 80G(5).

Government or any local authority, to be utilised for any charitable purpose other than promoting family planning.

Any authority constituted in India to deal with and satisfy the need for housing accommodation or the purpose of planning, development or improvement of cities, towns, villages or both.

Any corporation referred to in Section 10(26BB) for promoting the interest of the minority community.

For repairs or renovation of any notified temple, mosque, gurudwara, church, or other places.

What is adjusted Gross Total Income?

Adjusted Gross Total Income is calculated by reducing the following from the gross total income:

(a) Deductible amounts under Section 80C to 80U (excluding Section 80G)

(b) Share of profit in Association of Persons (AOP) eligible for rebate under Section 86

(c) Long-term capital gains

(d) Short-term capital gains arising from specified securities under Section 111A

(e) Any income specified in Sections 115A, 115AB, 115AC, 115ACA, 115AD, and 115D

Consider a scenario where your gross total annual income is Rs. 14 lakh. You've contributed Rs. 90,000 to NGOs, eligible for a 50% deduction with a qualifying limit of 10%. Additionally, you've availed deductions of Rs. 1.5 lakh under Section 80C and earned short-term capital gains of Rs. 2.5 lakh from the sale of equity shares.

To determine the maximum amount allowable under Section 80G, you first calculate your adjusted gross total income. This is your gross total income (GTI) reduced by deductions under Section 80C and short-term capital gains under Section 111A, resulting in (14 lakh - 1.5 lakh - 2.5 lakh) = Rs. 10 lakh.

Next, compute the qualifying limit for donations under Section 80G, which is 10% of your adjusted gross total income. In this case, the qualifying limit is Rs. 1,00,000.

The maximum allowable deduction under Section 80G is 50% of the lower amount between

 a) the donated sum (Rs. 90,000) and 

b) the qualifying limit (Rs. 1,00,000). 

In this instance, the lower amount is the qualifying limit of Rs. 90,000. Therefore, the maximum deduction allowable under Section 80G is 50% of Rs. 100,000, equaling Rs. 50,000.

Therefore, you can claim a deduction of Rs. 50,000 under Section 80G for the donations made to eligible NGOs.

To claim a tax deduction under Section 80G, individuals must have the following essential documents:

1. Duly Stamped Receipt:  It is imperative to obtain a receipt from the charity or trust to which the donation is made. The receipt should be duly stamped and include crucial details such as the donor's name, address, donated amount, PAN number of the trust, and other relevant information.

2. Form 58 becomes necessary when a donor intends to claim a 100% deduction. This form is required to validate and support the claim for such deductions.

3. Registration Number of Trust: Eligible trusts under Section 80G are assigned a registration number by the Income Tax Department. Donors must verify and ensure that the receipt they receive contains the trust's registration number, serving as a crucial validation for the donation.

Ensuring the availability and correctness of these documents is vital for substantiating the claim for tax deductions under Section 80G. Donors should maintain these records accurately to facilitate a smooth and legitimate deduction process during income tax filing.