Dear readers, as you all know activities related to Social Welfare are part of our Society. Some peoples from society take this initiative to do Social welfare activities to help needy peoples. In the Current situation of COVID -19, the whole economy is in lockdown and the NGO of India has taken the responsibility along with State/Central Government to do social activities like providing Food and shelter to needy peoples. Some Persons are also managing this situation at their individual levels also. They are taking funds from their known persons through Paytm/Banking Channel and spending this amount for Social Welfare but receiving of this fund at their individual level may create a problem for them at the time of Income Tax Return Filing. So, it is suggested to avoid receiving of donation in the individual account instead receive the donation through a registered NGO so that, this NGO receives fund for social activities and the Donor also get deduction under Section 80 G (If applicable). In Today’s Article, we will discuss NGO’s and how they can raise funds for their Social Activities.

NGO

NGO may be in the form of Society/Trust/Section 8 Company under Companies Act. After their Primary Registration, they have to get registered themselves under Section 11, 12 and Section 80 G of Income Tax Act, 1961, so that they get an exemption from Income Tax Payment.

The main source of Revenue for NGO’S is as follows:

♦ Contribution from Members of the NGO

♦ Contribution from Public

♦ Foreign Currency Donation from Outside India

♦ Government Funding/ Grants

♦ Grants from Companies Liable for CSR Activities

For receiving any Grants basic Documents required are as follows:

♦ Registration of NGO as Society/ Trust/ Section 8 Company

♦ Basic Registrations Such as registration under Section 11, 12 and Section 80 G of Income Tax Act, 1961

♦ Strong Governing Body

♦ A Good Profile of NGO showing Vision of NGO and their future Plans

♦ A Good Project Report on the basis of which NGO can ask for Donation

How to Raise Funding from Different Institutions

1. Donation from Members and General Public – For raising Funds from Members and General Public you have to explain about the social activities already taken and you must have registered under Section 80G, so that Donor also get a deduction on a donation made to NGO

2. Foreign Currency Donation from Outside India – Before receiving any donation from Foreign, you must have FCRA Registration. If any NGO receives any funds without FCRA Registration then it is a punishable Offence.

3. Government Funding/ Grants – Central and State Governments both are very active in granting donation to eligible NGO’s which are actively doing Social Activities. Before getting the Government Grants, the NGO Must be registered with NGO Darpan (Niti Aayog Registration)

I have already written an article related to Niti Aayog Registration under NGO Darpan and how to register with E- Anudaan portal which can be accessed from my profile Section. After registration with Niti Aayog, NGO will be eligible to file a Grant applicable with concerned Ministry

4. Grants from Companies Liable for CSR Activities – For Getting CSR Grants, NGO has to contact the Companies Liable for CSR Funding. Before Approaching for CSR Funding, the NGO must be ready with all Income Tax Exemption/ Deduction Certificate along with a detailed Project report showing how the received grants will be used for the welfare of society.

This article is for the purpose of information and shall not be treated as a solicitation in any manner and for any other purpose whatsoever. It shall not be used as a legal opinion and not be used for rendering any professional advice. This article is written on the basis of the author’s personal experience gained. Adequate attention has been given to avoid any clerical/arithmetical error, however; if it still persists kindly intimate us to avoid such error for the benefits of other readers.

The Author can be reached at mail –shivsharma786@gmail.com and Mobile/Whatsapp – 9911303737 / 9716118384

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Author Bio

Qualification: CA in Practice
Company: Shiv Kumar Sharma & Associates
Location: Delhi, New Delhi, IN
Member Since: 03 Dec 2018 | Total Posts: 45
My Self CA. Shiv Kumar Sharma. I am a member of "The Institute of Chartered Accountants of India" since 2012. I have Qualified my B.Com (H) in 2010 And Cleared CS- Executive Exam in June 2013. Currently, I am in Practice and dealing in Direct and Indirect taxation along with ROC Compliances. View Full Profile

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One Comment

  1. sanjeevnanda says:

    Times like these are crucial, and a single effort goes a long way. One should also know that a lot of charities do not fall under the purview of the tax dept, such as the novel PM Cares Fund – which is also 100% tax deductible as well. Many funds pay no tax to the government, and their true income remains undisclosed.
    ~Sanjeev Nanda

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