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An NGO can Avail income tax exemption by getting itself registered and complying with certain other formalities, but such registration does not provide any benefit to the person making donations. The Income Tax Act 1961 has certain provisions which offer tax benefits to “Donors”. All NGO’s should avail the advantages of these provisions to attract potential donors. Section 80G is one of such Section.If an NGO is registered under Section 80G than the person or the organization making a donation to the NGO will get a deduction of 50% from his/its tax Income. If an NGO gets registered under 12A and 80G, Than only it is applicable for any government funding. A newly registered NGO can also apply for 80G registration.
An NGO can apply for 12A certification and 80G certifications just after the registration of an NGO.
There is a ceiling limitation upto which the benefit is allowable to the donor. If the quantity of reduction to a charitableorganization is more than 10 % of the Gross Total amount income calculatedunder the Act (as lowered by earnings on which income tax is not payable underany arrangement of this Act and by any quantity in respect of which theassesse is entitled to a reduction under any other arrangement of this Chapter), then the quantity in excess of 10 % of Gross Total Earnings shall notget deduction under section 80G. While computing the overall income of an assesse and for arriving at the deductible quantity under section 80G, firstthe aggregate of the sums donated needs to be discovered. 50 per cent of suchcontributions has actually to be found out and it must be limited to 10 % of the gross total income. The unwanted will have to be ignored if such quantityis even more than 10 percent of the gross overall earnings.