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Home Media News Union Budget 2020 – 80G & Charity Institutions

Union Budget 2020 – 80G & Charity Institutions


Date: 05/02/2020

Union Budget 2020 – 80G & Charity Institutions

Union Budget 2020 – 80G & Charity Institutions
Finance Minister Nirmala Sitharaman presented her second Union Budget 2020.

Topic
Amendment of Section 80G ( Finance Bill, 2020)
sub-section (5)
in sub-section (5D)
after sub-section (5D)
Charity Institution
Amendment of section 80G. (The Finance Bill, 2020)
In section 80G of the Income-tax Act, with effect from the 1st day of June, 2020, (33)

(i) in sub-section (5),––
(a) in clause (vi), for the words “approved by the Commissioner in accordance with the rules made in this behalf; and”, the words “approved by the Principal Commissioner or Commissioner;” shall be substituted;

(b) after sub-clause (vii), the following shall be inserted, namely:––

(viii) the institution or fund prepares such statement for such period as may be prescribed and deliver or cause to be delivered to the prescribed income-tax authority or the person authorised by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed:

Provided that the institution or fund may also deliver to the said prescribed authority a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this sub-section in such form and verified in such manner as may be prescribed; and

(ix) the institution or fund furnishes to the donor, a certificate specifying the amount of donation in such manner, containing such particulars and within such time from the date of receipt of donation, as may be prescribed:

Provided that the institution or fund referred to in clause (vi) shall make an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for grant of approval,––

(i) where the institution or fund is approved under clause (vi) [as it stood immediately before its amendment by the Finance Act, 2020], within three months from the date on which this proviso has come into force;
(ii) where the institution or fund is approved and the period of such approval is due to expire, at least six months prior to expiry of the said period;
(iii) where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier;
(iv) in any other case, at least one month prior to commencement of the previous year relevant to the assessment year from which the said approval is sought:
Provided further that the Principal Commissioner or Commissioner, on receipt of an application made under the first proviso, shall,—

(i) where the application is made under clause (i) of the said proviso, pass an order in writing granting it approval for a period of five years;
(ii) where the application is made under clause (ii) or clause (iii) of the said proviso,––
(a) call for such documents or information from it or make such inquiries as he thinks necessary in order to satisfy himself about—
(A) the genuineness of activities of such institution or fund; and
(B) the fulfilment of all the conditions laid down in clauses (i) to (v); and
(b) after satisfying himself about the genuineness of activities under item (A), and the fulfilment of all the conditions under item (B), of sub-clause (a),––
(A) pass an order in writing granting it approval for a period of five years;
(B) if he is not so satisfied, pass an order in writing rejecting such application and also cancelling its approval after affording it a reasonable opportunity of being heard;
(iii) where the application is made under clause (iv) of the said proviso, pass an order in writing granting it approval provisionally for a period of three years from the assessment year from which the registration is sought,
and send a copy of such order to the institution or fund:

Provided also that the order under clause (i), sub-clause (b) of clause (ii) and clause (iii) of the first proviso shall be passed in such form and manner as may be prescribed, before expiry of the period of three months, six months and one month, respectively, calculated from the end of the month in which the application was received:

Provided also that the approval granted under the second proviso shall apply to an institution or fund, where the application is made under––

(a) clause (i) of the first proviso, from the assessment year from which approval was earlier granted to such institution or fund;
(b) clause (iii) of the first proviso, from the first of the assessment years for which such institution or fund was provisionally approved;
(c) in any other case, from the assessment year immediately following the financial year in which such application is made.”;
Sub-section (5D),
(ii) in sub-section (5D), after Explanation 2, the following Explanation shall be inserted, namely:––

“Explanation 2A.— For the removal of doubts, it is hereby declared that claim of the assessee for a deduction in respect of any donation made to an institution or fund to which the provisions of sub-section (5) applies, in the return of income for any assessment year filed by him, shall be allowed on the basis of information relating to said donation furnished by the institution or fund to the prescribed income-tax authority or the person authorised by such authority, subject to verification in accordance with the risk management strategy formulated by the Board from time to time.”;

Sub-section (5D)
In section 80GGA of the Income-tax Act, with effect from the 1st day of June, 2020,––
(i) in sub-section (2A), for the words “ten thousand rupees”, the words “two thousand rupees” shall be substituted;
(ii) after sub-section (4), the following Explanation shall be inserted, namely:––
“Explanation.––For the removal of doubts, it is hereby declared that the claim of the assessee for a deduction in respect of any sum referred to in sub-section (2) in the return of income for any assessment year filed by him, shall be allowed on the

“(5E) All applications, pending before the Commissioner on which no order has been passed under clause (vi) of sub-section (5) before the date on which this sub-section has come into force, shall be deemed to be applications made under clause (iv) of the first proviso to sub-section (5) on that date.”

Charity institutions (budget speech)
Acknowledging the important role played by the charitable institutions in the society, the income of these institutions is fully exempt from taxation. Further, donation made to these institutions is also allowed as deduction in computing the taxable income of the donor.
Currently, a taxpayer is required to fill the complete details of the donee in the income tax return for availing deduction.
In order to ease the process of claiming deduction for donation, it is proposed to pre-fill the donee’s information in taxpayer’s return on the basis of information of donations furnished by the donee. This would result in hassle-free claim of deduction for the donation made by the taxpayer.
Further, in order to claim the tax exemption, the charity institutions have to be registered with the Income Tax Department. In the past, the process of the registration was completely manual and scattered all over the country.
In order to simplify the compliance for the new and existing charity institutions, I propose to make the process of registration completely electronic under which a unique registration number (URN) shall be issued to all new and existing charity institutions. Further, to facilitate the registration of the new charity institution which is yet to start their charitable activities, I propose to allow them provisional registration for three years.