research topics on taxation in India.

A Review of Indian Tax law Research

(TOPIC)

A CRITICAL ANALYSIS OF THE BENEFITS OF INCOME TAX DEDUCTIONS FOR INDIAN CHARITIES.

TABLE OF CONTENTS

Abstract:...................................................................................................... 3

Introduction............................................................................................................................

Section 80G of the I-T Act:................................................................................................... 4

What is 80G Certificate?...................................................................................................4

Charitable donations meaning:............................................................................................ 4

Who can claim a deduction under Section 80G?................................................................. 5

deduction is allowed under section 80G.............................................................................. 5

Tax Exemption Under Section 80G of Income Tax Act:....................................................... 5

Disqualification from exemption:......................................................................................... 6

Registration under 80G: Benefits:....................................................................................... 6

Benefit u/s 80GGB of Income Tax Act, 1961:....................................................................... 7

Conclusion:..............................................................................................7

Abstract:
In this paper, I present a review of tax research. I survey four main areas of the NGO,Trust Society and Companies. Indian taxation law provides taxpayers making donations to charities with a deduction for the quantity of the donations. Indian taxation law allows donations made to specified relief funds and charitable institutions as a discount from the gross total income of a personal before arriving at the taxableincome.The research will target the meaning, mode and eligibility of charitable donations and therefore the deduction received thereof.

Introduction
Income tax in India is governed by Entry 82 of the Union List of the Seventh Schedule to the Constitution of India;1 this is often because taxes are the {most important|the biggest} and also the most important income for the govt. to develop the country2. Apart from common know deductions like section 80G of the I-T Act allows donations made to specified relief funds and charitable institutions as a deduction from gross total income. This way you'll save tax while doing a little good work is by using the deductions available under Section 80G of revenue enhancement Act.The Government of India introduced Section 80G deductions to encourage people to donate. the govt, by providing tax relief, intends to motivate people to form more donations to worthy causes3. A well-structured legal system is set-up by India for its people. this can be because taxes are the {most important|the biggest} and therefore the most important income for the govt to develop the country. Taxes must be passed as a law for the govt. to implement them. The Central and therefore the regime, together with municipal corporations are behind this planning.Not only god but the taxation department admits the actual fact that charity is a wonderful task. “Contributions made to certain relief funds and charitable institutions is claimed as a deduction under Section 80G of the revenue enhancement Act. All donations, however, aren't eligible for deductions under section 80G. Only donations made to prescribed funds qualify as a deduction.”Any taxpayer, i.e., individuals, company, firm or the other person can claim these deductions. These deductions and other similar reliefs, allow donors within the reduction of their taxable income as they're contributing a component of their assets. These schemes also increase the motivation for giving of the taxpayers.

Section 80G of the I-T Act:

Section 80G of the tax Act allows you to assert a write-off on charitable contributions made during the year after you file your taxation return. This puts you during a lower income bracket and reduces your tax obligations. Deduction under Section 80G are often claimed by individuals, partnership firms, HUF, company and other varieties of taxpayers, regardless of the sort of income earned. NGO, Trust, Society and institutions registered under Section 80G are supplied with a license number by the tax Department and donors should ensure their receipt contains this number. This license number has to be valid on the date of a specific donation. If the donation is created while the Section 80G registration isn't valid, then the donation wouldn't be eligible for deduction.

What is 80G Certificate?
80G Certificate is issued under taxation Act, 1961 to NGO’s by tax Department.
The primary objective behind the grant of 80G Registration is to motivate more donors to the organizations for donating funds.Furthermore, the donors receive a 50% tax exemption on his total taxable income. To avail this exemption, the donor must attach the stamped receipt against the donation issued by the NGO.

Eligibility for 80G Exemptions
Only donations made to charities registered under Section 80G are eligible for an 80G deduction and registration. In most cases, charities with a non secular or business angle don't receive 80G certification. Similarly, gifts made to trusts operating outside India aren't eligible for such a tax write-off. Additionally, individuals who donate to non-public trusts that don't have an 80G registration, or to political parties, cannot avail of any tax exemption for the amounts donated. Such contributions and donations will still be a component of their taxable income.
As per Budget 2020, every public trust or institution registered under Section 80G must submit a press release of donations received. Donors will receive tax benefits under Section 80G supported the data furnished by the trust or institution.

Tax Benefits to the Organisation
The certification helps donors reduce their liabilities by between 10% to 50% on the number donated. However, the 80 G certification does quite allowing donors to say tax exemption on their donations. It also provides organisations with several tax benefits. The institution can get an exemption of 10% for the gross income got through donations and contributions. 
Moreover, the tax Department has the facility to approve or reject such requests upon disqualification of the non-profit organisation or dissatisfaction with its activities. While the first role of 80G certification is to encourage donors to donate funds to non-profit organisations, it can help organisations in several ways. 

Charitable donations meaning:
Charitable donation may be a gift made within the variety of cash or property to a non-profit organization, with nothing given reciprocally that's accustomed help the organization accomplish its goals and objectives. The organization must have a non secular, educational, literary, charitable, or scientific purpose. This deduction will be claimed by any taxpayer – individuals, company, firm or the other  person4. These deductions and other similar reliefs, allow donors within the reduction of their taxable income as they're contributing part of their assets. within the case of CIT v Ahmadabad Rana Caste Association, it absolutely was held that the aim that a donation is formed must be charitable and for the good thing about the society at large and not for a private benefit5.

Who can claim a deduction under Section 80G?
Any person can claim deduction u/s 80G. It doesn’t matter if the assessee claiming the deduction is a private, HUF, Company etc.Even non-residents are eligible for this deduction.The only c ondition is that the donation must be made in specified funds & institutions only.

Deduction is allowed under section 80G:
While your generosity may know no limits, tax benefits on donations do. Some donations are allowed 100% deduction while some have limits. Read below to grasp what quantity deduction amount your donation is eligible for.

Tax Exemption Under Section 80G of Income Tax Act:

1. Not every donation qualifies for a 100% deduction. Every assessee must see the eligibility of the organization while claiming a deduction.
2. Any assessee can claim deduction i.e. individual taxpayer, Indian companies, partnership firm, and so on.
3. A donation made in benefit far more than Rs 2,000 isn't eligible for deduction.
4. Any donation made in a similar way like clothes, food, medicines, etc don't qualify as a deduction or tax deduction.
5. The donation varies as per the eligibility criteria. The deduction will be 100% or 50% with or without restriction as per the provisions of section 80G.
Disqualification from exemption:
Even after registration and meeting all requirements under the revenue enhancement Act, here are some situations which can still disentitle a donor from claiming the deduction.

1. If a charitable organisation registered as NGO is engaged in religious affairs or promoting interests of a selected caste of community.
2. If this registration process for NGO has any ‘non exempted income’, that's if they need any business income or an advertisement purpose that provides rise to incomes not specifically exempted for NGOs.
3. If the donor pays in cash – the govt from the budget 2018-19 onwards has reduced the admissible deduction, if cash has been used from 10,000 rupees to only 2,000 rupees. However, there's no such limit for cheque or other electronic modes of transfer.

4. If the NGO doesn't maintain its routine account of expenditures and receipts.
5. If the NGO isn't duly registered under the Societies Registration Act of 1860 or under Section 8 company registration Act, 2013.

Registration under 80G: Benefits:

The major benefit is that you simply can seek to register under 80G of the taxation Act. The advantage NGO registration confers is that the donor (that is that the person donating money) to the NGO will now not be taxed for donating to your NGO. The donors can use this registration to cut back the quantity they donate to an NGO from their total taxable incomes.

1. As a society bylaw, 80G certification makes your NGO become a promising prospect and enhances the worth of the organization and confidence of these related to it.
2. It effectively enables a donor to not just feel good about making a donation for a cause but also reap the vantage of lowering taxable income related to it. Only an NGO registered under both 12A and 80G is eligible for availing government funding.
3. Getting an 80G registration also helps in seeking foreign contributions.

Benefit u/s 80GGB of Income Tax Act, 1961:
While computing the overall taxable income, an assessee being an Indian Company can claim deduction under section 80GGB. The deduction are often claimed against a donation made to any organisation or an electoral trust within the previous year. However, the Indian company cannot claim any deduction if the mode of payment is cash.

Conclusion:

It is the 21st century but people are still unaware of the tax benefits received by way of donations. there's a scarcity of data and awareness with relation to claiming the advantages.
Section 80G is a good and simple thanks to get tax deductions. However, if one is looking to induce additional tax deductions, they will do so by choosing Insurance on companies. They have qualifies for tax deductions under Section 80D of the taxation Act. aside from offering the good thing about tax savings, this insurance plan protects you and your family in times of medical emergencies. Minimise your tax outgo while protecting the medical and financial health of your loved ones. it's also important to notice that several Non-govt. organizations and are working towards the betterment of society and towards eliminating poverty, don't avail ANY tax concessions.

Name - Priya Singh ( 4th semester - 8 )

College Name - Ajeenkya D.Y Patil University, Lohegaon, Pune.

Mail Id - priyavishen2001@gmail.com