Funds are necessary for NGOs, trusts, and philanthropic organizations to operate. To stimulate donations and promote activity for good causes, tax breaks are offered to both donors and receiving NGOs. Furthermore, NGOs were required to register under Sections 80G and 12A of the Income Tax Act to benefit from these exemptions. This registration was determined to be indefinitely valid.
This system has undergone adjustments as a result of the Finance Bill 2020. Re-registration under Section 80G and fresh registration under Section 12AB are now required, even if the exemptions are still available.
- CSR-1 Form For CSR Funds
CSR financing, or corporate social responsibility financing, is when non-governmental organizations (NGOs) get funds or subsidies from companies to carry out tasks such as environmental conservation or attempting to effect social progress. Furthermore, beginning April 1, 2021, NGOs must register with the MCA portal using Form CSR-1 to be eligible for such grants.
Eligibility to file the CSR-1 form
- It should be one of the following colleges or universities:
- a corporation formed under Section 8 of the Act, or a registered public trust or society formed under Sections 12A and 80 G of the Income Tax Act, 1961.
- a Central Government or State Government-created Section 8 corporation, incorporated trust, or established society.
Documents needed to file a CSR
- The NGO’s PAN card
- Your email address and phone number.
- The approved person’s digital signature, along with their PAN number.
- A certificate of registration.
Furthermore, to receive these advantages, NGOs must re-register with the Internal Revenue Service using Form 10A.
Section 80G was amended
Donors can claim an income deduction under Section 80G of the Act when they make contributions to specific relief funds and charitable institutions. This exemption is only possible when donations are given to NGOs that have been approved under Section 80G. Furthermore, the Finance Bill 2020 made the following changes to this clause, which will take effect on June 1, 2021:
- An institution should seek Section 80G recognition from the Principal Commissioner or Commissioner. Additionally, they will have the authority to grant the registration. Furthermore, the concept of perpetual registration has been abandoned, and institutions must now apply for renewal every five years under this clause.
Form 10A (described above) must be submitted to the Principal Commissioner to be approved under Section 80G.
- First-time registration Under Section 12AB
All charitable organizations must now register under Section 12AB for the first time. With effect from April 1, 2021, this is to receive the advantages given under Sections 11 and 12.
- If you are a non-profit organization that is already registered under Section 12A/12AA, you must register under Section 12AB within three months.
You can also make the procedure easier by using Vyapar Aadhar’s Section 8 and Section 12A compliance package, which will take care of everything for you.