As a responsible citizen of India, it is crucial to stay aware of the various tax-saving measures available to us. One such measure is Section 80G of the Income Tax Act, which allows taxpayers to claim a deduction on donations made to certain charitable institutions. However, in order to claim this deduction, it is mandatory to obtain a certificate from the Income Tax Portal. In this article, we will discuss the importance of this certificate, the process to obtain it, and its implications.
What is Section 80G?
Section 80G of the Income Tax Act, 1961, allows taxpayers to claim a deduction on donations made to certain charitable institutions. This deduction is available to all taxpayers, including individuals, HUFs, and companies. The amount of deduction varies depending on the type of institution and the amount donated. For instance, donations to institutions that have been granted a 100% deduction under Section 80G are fully deductible from the taxable income of the donor.
Why is a Certificate from the Income Tax Portal Necessary?
In order to claim a deduction under Section 80G, it is mandatory to obtain a certificate from the Income Tax Portal. This certificate is issued by the Commissioner of Income Tax or any other authorized person and is valid for a period of one year. The certificate serves as proof that the charitable institution to which the donation has been made is eligible for deduction under Section 80G. Without this certificate, the donor cannot claim the deduction.
How to Obtain the Certificate?
To obtain the certificate, the donor needs to visit the Income Tax Portal and fill in the Form 10G. This form requires the donor to provide details such as the name and address of the institution, the amount donated, and the PAN of the institution. The form also requires the donor to attach a copy of the trust deed, registration certificate, and the latest audited balance sheet of the institution.
Once the form is submitted, it is verified by the Income Tax Department, and if all the details are found to be correct, the certificate is issued to the donor. The certificate is issued in the name of the donor and is non-transferable.
File Statement of Donations
As per the Income Tax Act, taxpayers are required to file a Statement of Donations with the Income Tax Department if they wish to claim a deduction under Section 80G of the Act. The statement must contain details of all the donations made during the year to eligible institutions and the amount of deduction claimed.
The statement can be filed along with the income tax return or separately. Taxpayers can file the statement in Form 10BD, which is a newly introduced form for this purpose. The form requires taxpayers to provide details such as the name and address of the institution, the amount donated, and the PAN of the institution.
It is important to note that the Statement of Donations must be filed within the due date for filing the income tax return. Failure to file the statement can result in the deduction being disallowed, and the taxpayer may be required to pay additional taxes and penalties.
Therefore, it is essential for taxpayers to stay aware of the requirements and file the Statement of Donations in a timely and accurate manner to avoid any unnecessary tax liabilities.
Certificate of donations
As per the Income Tax Act, eligible institutions that receive donations from taxpayers must issue a certificate of donation to the taxpayer. This certificate is necessary for the taxpayer to claim a deduction under Section 80G of the Act.
The certificate of donation must contain details such as the name and address of the institution, the PAN of the institution, the amount donated, and the date of donation. The certificate must also mention the registration number of the institution under Section 80G of the Act.
It is important to note that the institution must issue the certificate of donation to the taxpayer within a reasonable time from the date of donation. Failure to issue the certificate can result in the taxpayer being unable to claim the deduction.
Taxpayers must ensure that they receive the certificate of donation from the institution and retain it as proof of their donation. The certificate should be filed carefully and kept safe, as it may be required to be produced in case of any scrutiny by the Income Tax Department.
In conclusion, issuance of the certificate of donation is an important process that must be followed by eligible institutions to enable taxpayers to claim deductions under Section 80G of the Income Tax Act. Taxpayers must ensure that they receive the certificate and retain it carefully to avoid any issues in the future.
Implications of Not Obtaining the Certificate
If the donor fails to obtain the certificate from the Income Tax Portal, they will not be able to claim the deduction under Section 80G. In addition, the donation made by the donor will not be eligible for any tax benefits. Therefore, it is essential to obtain the certificate before claiming the deduction.
In conclusion, Section 80G of the Income Tax Act is an excellent tax-saving measure for individuals and companies. However, to claim the deduction, it is mandatory to obtain a certificate from the Income Tax Portal. The process of obtaining the certificate is straightforward and can be done online. Therefore, it is important for all taxpayers to stay aware of the requirements and obtain the certificate before claiming the deduction.
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