how tax exemption builds meaningful connection between donor and ngo

HelpAge India

http://www.helpageindia.org HelpAge India [email protected] C-14, Qutab Institutional Area

Toll Free Elder Help Line: 1800-180-1253 New Delhi - 110016

How Tax Exemption Builds Meaningful Connection

between Donor and NGO

As we by now are

familiar with the

fact that an NGO

can avail income

tax exemption by

getting itself

listed as well as

abiding by certain

other regulations,

however such

registration

doesn't deliver

any benefit to the people making contributions. The IT Act has particular

provisions which provide benefits to the people who contribute. All Non-

Governmental Organizations avail the advantage of these provisions to draw

potential donors to donate online. Sec 35AC is one such section.

HelpAge India



REGISTRATION

The Central Government

supports particular Non-

Governmental

Organizations and notifies

them as entitled for project

or schemes for the

purposes of this section. If

a Non-Governmental

Organization is successful

in getting such consent for

its projects then it stands a very decent opportunity of collecting funds from the

corporate as well as the business sector. Companies donating to such approved

plans are permitted the benefits of deducting such aid as expenditure.

NATIONAL COMMITTEE

The Central Government

has set up a National

Committee to categorize

schemes and projects to be

notified under section 35AC,

such committee usually

comprises well-known

people. All Non-

Governmental Organizations

are permitted to apply to

the National Committee to get its schemes or projects approved.

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CERTIFICATE TO BE GIVEN TO THE CONTRIBUTOR

All approved Non-

Governmental

Organizations are required

to issue a certificate to the

contributor for any receipt

& donation under sec

35AC. The document is to

be given out in Form 58A.

This will allow the person

who contributes to claim

income tax exemption.

Further, the Non-

Governmental

Organizations moreover

send a Yearly Report to the National Committee showing the improvement of the

work relating to the project/scheme and the following facts regarding each donor:

Name of the donors & their addresses

PAN

Amount of contributions

The project for which the contribution is made

Entire amount of contribution received in the year

Entire budget of the project permitted by the National Committee

HelpAge India



All in all, Section 35AC though

occasionally used as compared to

Section 80G of the Income Tax Act, it

can turn out to be a strong tool in the

hands of the NGOs for mobilization of

monetary resources if used well.

This section can build a connection

between business sector as well as

the NGO sector in terms of raising of

funds and its utilization in socially

relevant schemes.

Procedurally too it appears to be less disorderly than the other provisions like

80G, therefore it is wise to use this section by persuading Companies to make a

contribution towards socially relevant project through section 35AC.

Taking advantage of

this tax exemption

tool, one can make

donation for elderly

to help senior citizens

eventually making

their life worthwhile.

how tax exemption builds meaningful connection between donor and ngo

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