- Donation by NPOs to another NPO to be allowed upto 85%
Effective 1-4-2024 onwards, donations given by one NPO to another, only 85% will be allowed as application to the first NPO.
Apparently Tax Dept fears that NPOs who are required to spend only 85% of its income are defeating the purpose of donations, by forming multiple trusts and accumulating 15% at each layer. Hence this rather regressive amendment, which will discourage institutions (particularly those who themselves are an NPO) to transfer to other NPOs.
- NPOs would need to finalise their accounts by 31 August 2023 – Form 10 & Form 9A to be submitted two months before the date of filing ITR
All NPOs have to file Form 10 (for accumulation or setting apart of their income) alongwith their ITR. However now this has to be filed at least 60 days prior to the last date of filing the return.
Similarly NPOs are required to file Form 9A declaring the amount of income to be applied. Presently this declaration is filed alongwith the ITR by NPOs. However now this also needs to be filed at least 60 days prior to last date of filing return.
The above provisions have become applicable effective 1-4-2023. This means all entities would need to finalise their accounts by 31st August 2023, 2 months preponement compared to previous years. This would put enormous pressure both on NPOs as well as their chartered accountants.
- Do not forget to apply for Full registration under S.12AB, after receiving Provisional Registration
If you have rec’d provisional registration and have not applied for full registration under S.12AB, you could be running the risk of your assets being subjected to Tax as a non-charitable entity.
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Socio Research & Reform Foundation (NPO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008.