Form 10BD and 10BE for availing tax deduction beneath Sec 80G because the deadline approaches on thirty first May 2022.
As per the enforcement of the amendments to the Income Tax Act 1961, from FY21-22, the strategy for availing tax deduction beneath Section 80G on donations made to NGOs has modified.
Dhaval Udani, Founder and CEO-DanaMojo say, “Earlier, the donor solely had to supply the receipt obtained from the NGO as proof. However, from FY22, the burden of compliance is now shifting to the NGO which must file a Statement of Donations in Form 10BD by thirty first May of every monetary yr.
He additional provides, “The NGO will also need to provide the donor in the form of a consolidated Donation Receipt in Form 10BE to be downloaded from the Income Tax portal.”
Implications for the frequent man
The frequent man often doesn’t give with the aim of saving taxes. Experts say tax advantages are a hygiene issue and never the first motivator for giving. And thus as soon as somebody has given, they wish to additionally save on their taxes. Many occasions it’s forgotten for the reason that quantity is small, receipts are misplaced, donations are forgotten and so forth.
Udani factors out, “With the new amendment, the common man will now be able to claim all the tax benefits of his/her donations. And thus it may further motivate them to give more.”
Implications for NGOs
NGOs will now have the extra process of compliance and submitting earlier than May 31 which can put a further burden on them with their already restricted sources. Therefore, “they may focus more on institutional or CSR giving or high net worth individuals. They may decide to forego individual donations—especially the small-ticket ones to reduce the overhead of compliance,” says Udani.
“It is therefore quite possible that small and mid-sized NGOs may eschew taking donations directly from individuals going forward. Even if they do consider retail donations or a retail strategy, they are most likely to use other intermediaries such as GiveIndia, Charities Aid Foundation (CAF), etc, to get donations from individuals, thus avoiding the cumbersome and resource-heavy task of filing voluminous statements,” he additional provides.
Suggestions for Govt
In any case, NGOs must bear a further effort and value of compliance on this regard. Industry specialists say the Government can take another steps to scale back this effort and enhance giving within the nation provided that they’ve now tightened this course of and plugged any lack of tax. Such as;
1. Do away with the donor tackle requirement: As the brand new assertion would require the PAN quantity for all donations, the donor’s tackle will probably be out there by way of PAN. “The need for capturing the donor address again just adds to the reporting burden, and is one more point of friction for the giver,” factors out Udani.
2. Provide 100 per cent tax exemption for 80G donation: With all this transparency, Udani provides, “most of the frauds related to the exemption claimed but no donation made, will be rooted out. The government should therefore provide 100 per cent tax exemption for charitable donations, much like it does for other investments and insurance.”
Overall Impact
Overall, specialists say there will probably be larger transparency within the system for donations and ensuing tax exemptions claimed. This will be sure that individuals not donating, however claiming exemptions, will probably be eliminated thus lowering the tax lack of the federal government to that extent and it’ll give us a real image of 80G donations within the nation.
Source: www.financialexpress.com”