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April 7, 2020

Step wise process for Online Registration of 80G Certificate for Trust in Income Tax & Important Clauses for non-rejection

by facelesscompliance in Compliance Law, Income Tax

Step wise process for Online Registration of 80G Certificate for Trust in Income Tax & Important Clauses for non-rejection from April 2020

Introduction

To encourage donations and support NGO the government provides income exemption to all public charitable trust which are registered under section 12A and12AA. Further to encourage donations from public government has provided 80G Exemption to all trust, so that the person who donates get exemption of 50% of the amount donated from his total income.

80G is an exemption offered by the government against Donations. The government allows donations made to  charitable institutions  and specific relief funds as a deduction from gross total income before arriving at taxable income. After formation of Trust the trust acquires exemption of income tax of the Trust/ Organization under Section 12AA registration in accordance to the Income tax Act. Similarly under 80G the donors can avail exemption of income in forms of donations as prescribed by law under the income tax act. After acquiring the 12AA certification the Trust is to register for 80G Certification so as to avail the exemption benefit to its Donors thereby encouraging more contributions for the better management of Trust and in order to fulfil the Trust objectives for the betterment of the society at large. The Following article with help you to register online under section 80G under the Income Tax Act.

Some important clause to be noted for 80G Certification

Recently it has been observed that the Income Tax Department is raising objections to provide 80G certification due to issues in the Trust Deed. In order to avoid these hurdles it is important for appropriate drafting of the trust deed. Some important points that are highlighted in the objections are about including certain clauses and avoiding the other they are as follows:

  1. Object Clause- The trust deed should not contain any object clause that seems to be of a commercial nature
  2. Irrevocable Clause-  is to be inserted. This clause is important and should state that,  “ it is expressly provided & agreed that the trusts created by this Deed of Trust by settler is irrevocable. The trust is irrevocable”.
  3. Property clause-  will be inserted, here it is to be noted that this clause specifically mentions that, “The funds/ property of the trust will be used only for the objectives of the Trust.”
  4. Investment Clause- This clause should state that, the investments shall also be done as per section 11(5) of the Income Tax Act.
  5. Utilization of Profits Clause-  This clause is to e include ad should mention that, The profits or income of the trust shall be solely used for the objects of the trust and for the benefit of the public at large.
  6. Amendment Clause- This clause is to be included in the trust deed separately stating that Board of Trustee will have power to omit, alter, amend or change any clause of the said trust but subject to the permission of the charity commissioner.
  7. Beneficiaries Clause- This clause is essential and should be stated as follows, The beneficiaries of the Trust are a section of the public and not specific individuals. The beneficiaries are a section of the  public not specific individuals irrespective of caste,  class, race, creed, gender or individual.
  8. Winding up Clause- in this clause it is to be specifically stated that in the event of winding up of the trust assets left if any, shall be disbursed/ transferred only to some other Trust or Association having similar objectives with the permission of the Charity Commissioner / Court / any other applicable authority(ies) as may be applicable for the time being.

It is to be noted here that the object clause should not have any clause that may be or seem to be of a commercial nature.

Following is the step wise process for online 80G registration of Trust:

  • Login with your regular Income tax Login and Password

Login with your regular Income tax Login and Password

  • Go to e-File- Income Tax Forms
  • Pan will automatically be reflected- Select Form Name- Form 10G- Application u/s 80G (5) (vi) {Charitable Fund/ Institution}-  submission mode- Select- Prepare & Submit Online and click on Continue ( Please note ** Select Form as per your Trust Deed and Requirement)
  • Fill Form 10G

Part A- Half Part A will be automated prefill- Select- Respective Post Office

Part B- Legal Status- There are 7 options available in Legal Status- – Select- Constituted as Public Trust- under- Bombay Public Trust Act

Part C- Select Purpose- 7 Options will be available-  You are to Select as applicable and click on add, once you select so that you can add other objectives too as per your Trust Deed

1a) In case of advancement of any other object of general public utility”- You are to select Yes/ No as relevant if yes provide Details for the same

Part D-  Details of Author/ Founder/ Settlor & Part E- Details of Trustees ( All Trustees)

Part F- Part 1-  Exemptions/ Approval/ Registration Details- You will have to select from 17 Options whichever is relevant also Status of approval is to be selected as per relevance- Section 11 is for General Exemption and select status as is relevant if approved/ applied / registered under section 12AA

Part F- Part 2-  Select Section 12A/12AA as is relevant to you enter Registration No and Date of Registration

Part G- Details of Business- As applicable Select Yes/ No and Part- H- Details of Demand- As applicable Select Yes/ No

Part I- Details of Religious Expense if any – Select Yes/ No as applicable if Yes provide details

Part- J- Miscellaneous

Irrevocable- Select – Yes- Select- relevant Section and status and fill in the order No, order date and Authority- ( ** Note- these details you will received from 12AA Order)

Verification and other Details- Fill in the relevant details- Preview and Submit-Upload relevant Documents-  Download Form Print the same.

Following are the List of Documents Required for Certificate U/S 80G

  • Duly filled in form No. 10G in Duplicate.
  • Trust’s PAN.
  • Certified copy of Trust Deed/ Memorandum of Association by Charity Commissioner/ ROC.
  • Certified copy of Charity Commission’s Certificate/ Certificate of incorporation of Company by Charity Commissioner/ ROC.
  • Trustee’s PAN, Name and Address.
  • Certificate u/s 12AA of the I.T. Act.
  • Activity Proof.
  • Bank Account proof.
  • Address proof.
  • List of Donors.
  • Copies of Return of income for the last three years with Audited Accounts.
  • Any other proof in support of Activities carried out by the Trust.

List of documents to be uploaded & submitted physical copies of the same attested by Trustees with Downloaded Form 10G to the Income Tax Officer Charitable Trust. After submission you will be provided for a hearing date as per the discretion of the Officer before providing the 80G certificate.

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