Introduction
The Finance Act, 2020 has made a major procedural shift from the financial year 2021-22 (AY 2022-23) where, the donor will only be entitled to an 80G deduction if the statement of donations is uploaded against their PAN.
Prior to this amendment, there was no reporting obligation for the donee receiving a donation or any sum in respect of such donation. This standardization is similar to the provisions relating to tax collection/deduction at source, which already exist in the Act. Therefore, the entities receiving donations a required to furnish a statement in respect thereof and to issue a certificate to the donor.
Requirement To Furnish Statement of Donations
Where the donation is made by a person to any other fund or institution the donor is entitled to deduction under section 80G only when the donee fund or institution complies with the conditions as specified under section 80G (5). One of such condition is that the donee fund or institution shall be required to file a statement of donation to the Income-tax Department.
The statement of donation is required to be furnished in Form 10BD electronically under a digital signature. where the fund or institution is required to furnish a return of income electronically under a digital signature. In any other case, the application is required to be filed electronically through Electronic Verification Code(EVC).
Due date to file statement of donations
Statement of donation in Form 10BD is required to be furnished on or before 31st May of the financial year immediately following the financial year in which the donation is received. However, vide circular No 6 of 2023, the date for filling for donation received in FY 22-23 has been extended to 30th June 2023.
The donee fund or institution shall also be required to furnish a certificate of donation to the donor specifying the amount of donation received during the year in Form No 10 BE. The claim for deduction in respect of the amount donated to a fund or institution shall be allowed on the basis of information relating to said donation furnished to the income-tax department.
- The fund or institution can also file a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered originally.
- Form 10BD should include only those donations which are covered under the scope of section 80G. An NGO receives donations of various kinds and from different sources including:
- Foreign donations.
- In-kind donations.
- Anonymous donation.
- Donation in cash each exceeding Rs.2,000 and
- Petty donations up to Rs.2,000 in cash (where the donor doesn’t want 80G benefit and the organization has only the name and address of the donor and not the PAN). The small donors making donations up to Rs.2,000 in cash can also avail the benefit under section 80G. However, if a donor makes a cash donation in excess of Rs.2,000 then no 80G benefit and it shall be counted as Anonymous Donations.
- Any of the following IDs of the donor can be mentioned in Form 10BD:
- Permanent Account Number
- Aadhaar Number
- Tax Identification Number
- Passport Number
- Electro’s photo Identity Number
- Driving License Number
- All the donations received during the year from a particular donor should be clubbed together and reported as a single entry at the end of the year. However, the donations received from the same donor will have to be segregated in terms of the purpose for which they are received Le. Corpus, Specific or any other.
Anonymous donations are not required to be reported under Form 10BD. However, an anonymous donation can be exempt or taxable based on the quantum of donation and also the nature of the organization. Anonymous donations up to 5% of total donations are not subject to tax. Further, anonymous donations received by a partly charitable and partly religious organization are also not subject to tax under section 115BBC.
Once an organization uploads Form 10BD it can download the certification in Form No 10BE from the income tax portal. This certificate of donation is generated Individually for each donor. Form 10BE is required to be sent to the respective donor either by email or any other mode. Form 10BE shall be deemed to have been furnished only when this is sent to respective donors.
The donation should be reported on a receipt basis, however, a cheque deposited but not cleared by 31st March may be reported.