Certificate to be issued by trust for giving benefit of deduction under section 80G in respect of donation by donor

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Section 80G deals with granting deduction to the donor for giving donation to a trust registered under section 80G. Till now, assessee could claim deduction under section 80G just by mentioning details of donation made in his/ her Income tax return.

There could be different type of deduction from taxable income for making donation to trust registered under section 80G based on the type of trust to which donation is being made. However, now with advancement of technology and the intention of government for providing the assessee’s with a pre-filled return now, the trust’s also have to provide the details of donations received for government which shall be pre-filled in the Income tax return of the donor.

Section 80G(5)(ix) deals with the provision which prescribes the Form to be filed and certificate to be issued by the trust for making it eligible to claim deduction under section 80G of the Income tax act. Relevant extract of the provision are as under:

(ix) the institution or fund furnishes to the donor, a certificate specifying the amount of donation in such manner, containing such particulars and within such time from the date of receipt of donation, as may be prescribed:

Provided 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,—

(i) where the institution or fund is approved under clause (vi) [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020], within three months from the 1st day of April, 2021;

(ii) where the institution or fund is approved and the period of such approval is due to expire, at least six months prior to expiry of the said period;

(iii) where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier;

(iv) in any other case, at least one month prior to commencement of the previous year relevant to the assessment year from which the said approval is sought:

Provided further that the Principal Commissioner or Commissioner, on receipt of an application made under the first proviso, shall,—

(i) where the application is made under clause (i) of the said proviso, pass an order in writing granting it approval for a period of five years;

(ii) where the application is made under clause (ii) or clause (iii) of the said proviso,—

(a) call for such documents or information from it or make such inquiries as he thinks necessary in order to satisfy himself about—

(A) the genuineness of activities of such institution or fund; and

(B) the fulfilment of all the conditions laid down in clauses (i) to (v);

(b) after satisfying himself about the genuineness of activities under item (A), and the fulfilment of all the conditions under item (B), of sub-clause (a),—

(A) pass an order in writing granting it approval for a period of five years; or

(B) if he is not so satisfied, pass an order in writing rejecting such application and also cancelling its approval after affording it a reasonable opportunity of being heard;

(iii) where the application is made under clause (iv) of the said proviso, pass an order in writing granting it approval provisionally for a period of three years from the assessment year from which the registration is sought,

and send a copy of such order to the institution or fund:

Provided also that the order under clause (i), sub-clause (b) of clause (ii) and clause (iii) of the first proviso shall be passed in such form and manner as may be prescribed, 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:

Provided also that the approval granted under the second proviso shall apply to an institution or fund, where the application is made under—

(a) clause (i) of the first proviso, from the assessment year from which approval was earlier granted to such institution or fund;

(b) clause (iii) of the first proviso, from the first of the assessment years for which such institution or fund was provisionally approved;

(c) in any other case, from the assessment year immediately following the financial year in which such application is made.]

The certificate prescribed under section 80G sub section 5 clause (ix) has been covered in Rule 18AB as under:

Rule 18AB: Furnishing of Statement of particulars and certificate under clause (viii) and clause (ix) of sub-section (5) of section 80G or under sub-section (1A) of section 35.

18AB. (1) For the purpose of clause (viii) of sub-section (5) of section 80G and clause (i) to sub-section (1A) of section 35, the prescribed authority shall be the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) as the case may be.

(2) Statement of particulars required to be furnished by any research association, university, college or other institution or company or fund (hereinafter referred to as reporting person) under clause (viii) of sub-section (5) of section 80G or under clause (i) to sub-section (1A) of section 35 shall be furnished in respect of each financial year, beginning with the financial year 2021-2022, in Form No. 10BD and shall be verified in the manner indicated therein.

(3) The reporting person, referred to in sub-rule (2), shall, while aggregating the amounts for determining the sums received for reporting in respect of any person, —

(i) take into account all the donations of the same nature paid by that person during the financial year; and
(ii) proportionately attribute the value of the donation or the aggregated value of all the donations to all the persons, in a case where the donation is recorded in the name of more than one person and where no proportion is specified by the donors, attribute equally to all the donors.

(4) Form No. 10BD, shall be furnished electronically,—

(i) under digital signature, if the return of income is required to be furnished under digital signature;
(ii) through electronic verification code in a case not covered under clause (i).

(5) Form No. 10BD shall be verified by the person who is authorised to verify the return of income under section 140, as applicable to the assessee.

(6) The reporting person shall furnish the certificate as referred to in clause (ix) of sub-section (5) of section 80G or in clause (ii) to sub-section (1A) to section 35, to the donor in Form No. 10 BE specifying the amount of donation received during financial year from such donor, beginning with the financial year 2021-2022.

(7) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax(Systems), as the case may be, shall –

(i) lay down the,-
(a) data structure, standards and procedure of furnishing and verification of Form No. 10BD, single or multiple;
(b) the procedure to submit correction statement for rectification of any mistake or to add, delete or update the information furnished in Form No. 10BD; and
(c) the procedure, formats and standards for the purposes of generation and download of certificates in Form No. 10BE
(ii) be responsible for,-
(a) formulating and implementing appropriate security, archival and retrieval policies in relation to the Form No.10BD so furnished; and
(b) he day-to-day administration in relation to the generation and download of certificates in Form No. 10BE, from the web portal specified by him or the person authorised by him.

(8) The certificate referred to in sub-rule (6) is required to be furnished to the donor on or before the 31st May, immediately following the financial year in which the donation is received.

(9) Form No. 10BD referred to in sub-rule (1) shall be furnished on or before the 31st May, immediately following the financial year in which the donation is received.

Thus, Form 10BD needs to be filed by the trust, company or organization registered under section 35 or section 80G which is accepting Donation giving the details of donations received and same needs to be filed online and against which a Certificate will be generated in Form 10BE which needs to be provided to the donor by such organization. Effective from FY 2021-22.

The following details would be required by the trust or organisation of the donor to file Form 10BD:

1. Unique Identification number: [1st priority in case of resident donor: PAN or Aadhar. Next priority: Ration card, Electoral card, Driving license, Passport number. In case of non-resident: Passport number or Tax identification number of the country in which he is resident]
2. Section code: 80G, 35(1)(ii), 35(1)(iia) or 35(1)(iii).
3. Name of Donor:
4. Address of donor:
5. Donation type: Corpus, Specific grant, others
6. Mode of Receipt: Cash, kind, electronic mode, others
7. Amount of donation:

If a single donor has made donation for different purpose and covered under different sections then 1 line item needs to be added for each section for each donor.

To have a look at the Forms and Certificate Format CLICK HERE: Form 10BD (Form to be filed by Trust or organization accepting donation. Form 10BE: Certificate to be issued by such organization to the donor.

We feel government will integrate this with the income tax return of the individuals and give them a Income tax return pre-filled with donation details so that they don’t have to worry that under which section and upto what extent they will get deduction for such donation.

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