The Finance Bill 2024 proposes amendments to Section 80G of the Income-tax Act, specifically focusing on rationalizing timelines for funds or institutions seeking approval for donation receipt. Currently, delays in filing applications under the first proviso of sub-section (5) can lead to unintended lapses in approval. The amendments aim to address this by modifying the timelines and procedures outlined in the first and second provisos of the section. Notably, these changes seek to prevent inadvertent exclusions from the 80G approval, ensuring timely processing and compliance. Effective from October 1, 2024, these amendments are part of broader efforts to streamline the regulatory framework governing deductions for donations to approved charitable funds and institutions.
Budget 2024: Rationalisation of timelines for funds or institutions to file applications seeking approval under section 80G
Section 80G of the Act, inter alia, provides for the grant of approval to certain funds or institutions for receiving donation. Deduction is available for donations to approved funds or institutions, in the hands of the assessee making such donations.
2. The first proviso to sub-section (5) of section 80G provides timelines for filing application for approval, for funds or institutions referred to in sub-clause (iv) of clause (a) of sub-section (2) of section 80G. The second proviso lays down the procedure for processing the same. It has been noted that at times funds or institutions are unable to file application within specified timelines. A situation of unintended permanent exit of fund or institution from section 80G approval may also arise.
3. It is proposed to amend the first and second provisos to rationalise the timelines for filing applications for approval.
4. These amendments will take effect from the 1st day of October, 2024.
[Clause 26]
Extract of Clause 26 of Finance Bill 2024
Clause 26 of the Bill seeks to amend section 80G of the Income-tax Act relating to deduction in respect of donations to certain funds, charitable institutions, etc.
Sub-clause (iiihg) of clause (a) of sub-section (2) of the said section provides that in computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section, any sums paid by the assessee in the previous year as donations to the National Sports Fund to be set up by the Central Government.
Since, the Central Government had already set up the said fund by the name National Sports Development Fund with effect from 12th November, 1998, it is proposed to amend sub-clause (iiihg) of clause (a) of the said sub-section so as to substitute the expression “The National Sports Fund to be set up” with the expression “The National Sports Development Fund set up”.
This amendment will take effect from 1st April, 2025, and will, accordingly, apply in relation to the assessment year 2025-2026 and subsequent years.
First proviso to sub-section (5) of the said section provides that the institution or fund referred to in clause (vi) shall make an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for grant of approval.
It is further proposed to amend the first proviso to sub-section (5) of the said section so as to insert “or” between the clause (iii) and (iv) of the said first proviso and to amend clause (iv) of first proviso thereof to provide that, where activities of the institution or fund have not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said approval is sought; or commenced, at any time after the commencement of such activities shall make an application for grant of approval.
Item (B) of sub-clause (b) of clause (ii) of second proviso to sub-section (5) of the said section, inter alia, provides that the Principal Commissioner or Commissioner, on receipt of an application made under the first proviso, shall where the application is made under clause (ii) or clause (iii) or sub-clause (B) of clause (iv) of the first proviso, after satisfying himself about the genuineness of activities and the fulfilment of all the conditions if he is not so satisfied, pass an order in writing, in this manner specified therein after affording it a reasonable opportunity of being heard.
It is also proposed to amend item (B) of sub-clause (b) of clause (ii) of second proviso to the said sub-section (5) to provide that if the Principal Commissioner or Commissioner is not so satisfied, shall pass an order in writing, rejecting such application and cancelling its approval, if any, after affording it a reasonable opportunity of being heard.
Third proviso to sub-section (5) of the said section provide that the order under clause (i), sub-clause (b) of clause (ii) and clause (iii) of the second proviso to the said sub-section (5) shall be passed in such form and manner as may be provided by rules, before expiry of the period of three months, six months and one month, respectively, calculated from the end of the month in which the application was received.
It is also proposed to amend the third proviso to said sub-section (5) to omit that the order under sub-clause (b) of clause (ii) of the second proviso to the said sub-section (5) shall be passed in such form and manner as may be provided by rules, before expiry of the period of six months, calculated from the end of the month in which the application was received.
It is also proposed to insert a proviso after the third proviso to sub-section (5) of the said section to provide that the order under sub-clause (b) of clause (ii) of the second proviso shall be passed in such form and manner as may be provided by rules, before expiry of the period of six months from the end of the quarter in which the application was received.
These amendments will take effect from 1st October, 2024.
Proposed Amendment to section 80G of Income Tax Act, 1961 vide Finance Bill, 2024
In section 80G of the Income-tax Act,–
(a) in sub-section (2), in clause (a), in sub-clause (iiihg), for the words “the National Sports Fund to be set up”, the words “the National Sports Development Fund set up” shall be substituted with effect from the 1st day of April, 2025;
(b) in sub-section (5), with effect from the 1st day of October, 2024,–
(I) in the first proviso,––
(i) in clause (iii), for the words “whichever is earlier;”, the words “whichever is earlier; or” shall be substituted;
(ii) in clause (iv),––
(a) the words “in any other case,” shall be omitted;
(b) in sub-clause (B), the portion beginning with the words “and where no income or part” and ending with the words “such application,” shall be omitted;
(II) in the second proviso, in clause (ii), in sub-clause (b), for item (B), the following item shall be substituted, namely:––
“(B) if he is not so satisfied, pass an order in writing, rejecting such application and cancelling its approval, if any, after affording it a reasonable opportunity of being heard;”;
(III) for the third proviso, the following proviso shall be substituted, namely:–
“Provided also that the order under clause (i) and clause (iii) of the second proviso shall be passed in such form and manner as may be prescribed, before expiry of the period of three months and one month, as the case may be, calculated from the end of the month in which the application was received:”;
(IV) after the third proviso, the following proviso shall be inserted, namely:–
“Provided also that the order under sub-clause (b) of clause (ii) of the second proviso shall be passed in such form and manner as may be prescribed, before expiry of the period of six months from the end of the quarter in which the application was received:”.
