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Income Tax Exemption on donations to NGO under section 80g

Exemption for NGO under section 80g


If the trust is willing to give some benefit to its donors, then the trust should seek and obtain approval under section 80G (5).

As per Section 80G of the Income Tax Act, donations paid or given to any institution or fund established in India for a charitable purpose is eligible for deduction (normally 50%) in the hands of the donor subject to the following conditions:

  1. The income of the institution is exempt under section 11 or 10(23) or (23AA) or (23C) of the Act.
  2. The funds of the institutions are applied only for charitable purposes.
  3. The institution should not be for the benefit of any particular religious community or caste
  4. The institution maintains regular accounts of its receipts and expenditure.
  5. The institution shall be approved by the Commissioner of Income Tax.

Main points in this respect are:

  1. Section 80G applies to donations to any institution or fund, only if it is established in India for a charitable purpose and if it fulfils the stipulated conditions.
  2. Following conditions are required to be fulfilled under section 80G(5)-
      (a) the instrument under which the institution or fund is considered does not, or the rules governing the institution or fund do not, contain any provision for the transfer for application at any time of the whole or any part of the income or assets of the institution or fund for any purposes other than a charitable purposes; (b) the institution or fund in not expressed to be for the benefits of any particulars religious community or caste; (c) the institution or fund maintains regular accounts of its receipts and expenditure; (d) the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860, or under any law corresponding to that Act, in force in any part of India or under section 25 of the Companies Act, 1956, or is a University established by law, or is any other educational institution recognized by the Government or by a University established by law, or affiliated to any University established by law or its is an institution financed wholly or in part by the Government or a local authority, and (e) in relation to donations made after the 31st day of March 1992, the institution of fund is for the time being approved by the Commissioner in accordance with rule 11AA.
  3. The application should be made in Form No.10G, prescribed under rule 11AA and it is required to be submitted to the jurisdictional Commissioner of Income-tax.
  4. The trust is necessarily required to be registered with the Commissioner under section 12A. A trust can apply for registration under section 12A and simultaneously seek approval under s. 80G (5).
  5. There is a time-limit of 6 months (from the date on which such application was made), within which the Commissioner shall pass an order either granting the approval or rejecting the application. However, any time taken by the applicant in not complying with the directions of the commissioner is excluded.
  6. The period of validity of approval is specified in the order of approval, which cannot exceed five assessment years. Before the expiry of this period, the trust should seek continuance the approval, by submitting the application in Form No. 10G again.
  7. The approval u/s. 80 G is issued in writing after the Commissioner is satisfied about the genuineness of the activities of the trust and about fulfillment of all conditions laid down in section 80 G (5) (i) to (v).

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