How Can an NGO Benefit its Donors?

Ankita Singla 28 Mar 2019 6,600 Views 1 comment Print Income Tax | Articles

If you are a founder, manager of an NGO and wants to increase flow of donations into your NGO, then this article is for you. It casts a light upon why an NGO must go for registration under Section 12A and 80G of the Income Tax Act.

There are certain benefits available for the NGOs who get themselves registered under the said sections of Income Tax Act. Doesn’t matter whether you run your NGO in the form of Society, Trust or Section 8 Company. First you have to seek registration under Section 12A which will make you eligible for getting registration under Section 80G.

Noteworthy benefits of this registration are as follows:

It enables the donors to get tax exemption upto 50% of the donations made to your NGO. Consequently, both their taxable income and tax payable gets reduced. Without this registration for your NGO in India,your donation receipts would be entitled to be taxed at normal tax rates and the donors wont be able to avail exemptions available.
Section 12A and 80G Registration would make your NGO a promising organization since it is now recognised by Government of India. Also, this registration serves a legitimate proof of existence and purpose of your NGO which ultimately would enhance the confidence of everyone associated with it.
If you want to avail Government funding, then this registration is must without which you would be devoid of receiving Government funding.
For getting foreign donations as well, you need to get your NGO this registration.

Therefore, NGO’s should avail the advantage of these provisions to attract potential donors

Eligibility for availing this registration:

The NGO must maintain a clear account of donations received and spent.
Other than the charitable cause, the organisation or its byelaws should not represent any other cause. None of the donations can be spent toward anything but the charitable cause.
The organisation shall not be able to apply for 80G if it supports particular religion, caste or creed based activities.
The organisation should be formed as Society, Trust or Section 8 Company under the Companies Act, 2013.

Documents Required:

Copy of Registration Certificate
Copy of Trust Deed / Bylaws / Memorandum of Association & articles of Association
Copy of Pan Card of NGO
Registered Office Proof: Copy of Electricity Bill / House Tax Receipt / Water Bill
NOC from Landlord (where registered office is situated);
Evidence of welfare activities carried out & Progress Report since inception or last 3 years
Books of Accounts, Balance Sheet & Income Tax Return (if any), since inception or last 3years
List of governing body / board of trustees members with their Address, contact details
Copy of PAN Card of governing body/ board of trustees members
List of donors along with their address and PAN
Original Registration certificate, MOA /Trust Deed/Bye-laws of Society for verification
Any other document or affidavit/undertaking, if extra information is by the income tax department.