Socio Research & Reform Foundation

Dear friends,

I request your guidance on the following query.

If an NGO ( Grantee) has 12 A certificate but does not have 80 G certificate, and if the same NGO is getting donation / grant from an 80 G registered organization ( funder), should the funder deduct TDS.

Awaiting your reply please.

Regards

Neelima

Dear Friends,

Season’s greetings!

Those who opt for new income tax slabs have no incentive to donate for charitable purposes.

Is it not?

Do corporates get exemption on CSR spending? If yes, why do they insist on recipients to have 80 G? Such multiple exemptions on the same fund are in error. Is it not ?

Udayashankar 

Budget Proposals: NPO Taxation

In today’s post, proposals relating to registration requirement for New NGOs are covered.

NEW NPOS

S.12AA/S.80G/S.10(23)

Earlier any NPO wanting to apply for registration under S.12AA or S.10(23C) could do so anytime. Generally once granted approval, it was applicable form the Assessment year in which the NGO applied. However now the new NGO will need to apply before the commencement of the financial year (at least one month prior the commencement of the FY) from which the NGO wishes to avail Income Tax exemption. Thus if an NPO is formed say on 2^nd March 2020, it cannot apply for registration, which would cover Financial Year 2020-21. Its income could be exempt from tax only from FY 2021-22, provided application for exemption certificate is made at least before 1^st March 2021.

Once applied, a provisional certificate will be issued within one month of filing the registration application. The provisional certificate would be valid for 3 years. This is a positive development, as it will reduce corruption and hassles that new NGOs face while applying for S.12AA registration at present, as they are required to prove that their activities are genuine.

For converting provisional certificate into a Final Certificate, one would need to apply 6 months after starting the activities or six months prior to expiry of the provisional certificate whichever is earlier. Tax authorities will have six months to decide before issuing the final certificate.

Similar process is applicable in case of S.80G & S.10(23).

Only one registration to be opted out of S.12AA or S.10(23)

It may be noted that in future only one registration under Section 12AA or S.10(23) will remain operative. Thus in case of a new NPO, if it already has S.12AA registration, as soon as it obtains S.10(23) registration, it will have to opt for cessation of the earlier registration under S.12AA. In case of existing NPO having registration both under S.12AA & S.10(23), they will need to opt for one and then continue only that one in future.

Remaining aspects of changes in the Budget would be covered in next post.

All NGOs need to reapply for 12A / S.80 G certificates

EXISTING NGOS

Budget 2020 has brought bad news to all non-profit organizations, everyone would need to reapply for renewal of 12AA & 80G and S.10(23C) certificates. Let’s deal with each one of these registrations separately. In today’s post, position of existing NGOs is being covered, who already hold these registrations.

Certificate under 12AA

As all of us know, all non-profits who want their income exempt from Income Tax have to hold certificate under S. 12AA. This makes their income exempt from taxation, as long as they comply with S.11 conditions of Income Tax Act. Under the proposed budget provision, Section 12AA has been withdrawn and new Section 12AB has been inserted. As per this section all those holding certificates issued under 12AA or 12A would need to reapply for the certificates within 3 months of the section 12AB becoming effective. Thus all existing NGOs would need to apply for renewal of exemption certificate under S.12AB within 3 months of the notification date. 

The new certificate will be applicable from the Assessment Year from which the registration was issued originally. There is confusion based on drafting of the Budget provision, since it says that the certificate would be applicable for 5 years, however if an NGO’s original S.12AA certificate was effective say in 2010, then would it expire in 2015. We are sure that is not the intention and hopefully necessary correction would be incorporated in the certificate, ensuring 5 year’s from the date of current application.

The good thing is that the Income Tax Dept would need to decide about certificate within 3 months from the date applied.

Certificate under S.80G

Similarly a new application would need to be made for obtaining a new certificate under S.80G within 3 months of the notification notifying this clause becoming effective. Thus an application would need to be moved for obtaining a new certificate under this section.

Certificate under S.10(23C)

All entities holding registration under S.10(23C) would similarly need to reapply for a certificate under the new amended S.10(23C). Provisions are similar lines as described above for S.12AA certificate, that is, to be applied within 3 months from the date of notification, and decision to be given within 3 months of receipt of application. In case an NGO presently has both the S.10(23C) as well as S.12AA certificate, then S.12AA certificate would become inoperative.

Provisions for New NGOs would be covered in next post.

_________

Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008

Sir,

Can a non FCRA registered Trust take financial help from FCRA registered organisation for buying USG machine and other equipements for its small hospital having licence from the government?’

Please do reply soon.

With best regards.
Samir Kr. Halder,

Dear Members

An Indian entity transferred money to our FCRA account in March 2019. We informed the bank and the funds were returned immediately.

While filing quarterly returns the amount has been mistakenly shown as income. Is there a process to correct this?

Thanks

Dr.Prahalathan KK,
Co-founder, Bhumi

Dear Sir,

We have a registration under the FCRA act. We want to close an existing utilisation bank account. Is it necessary to take any prior permission from FCRA Department of the MHA? Or is it necessary to intimate the FCRA department about he closure of the utilisation bank account?

Regards,

Vidya Sagar Devabhaktuni
President
SKG Sangha

Dear Sir,

Please share some inputs on getting approval from CBDT to work outside
India for Charitable Purpose to promote International Welfare. What
are the criteria and the procedure.

Regards

Pragya Thakur

Dear Members

We have following query:-

Can a person be a executive committee member in more than one FCRA registered organization ? In one association , he is chief functionary and in second confederation , vice president. Now confederation while applying for changing its name has asked all office bearers to file undertaking on affidavit.

Will there be any issues if the same persons file the affidavit from two or more FCRA registered associations?

Regards

Sudeep Goyal