December 26, 2022

Form 10BD: Tax Rebate on Donation & Charitable Trust

Latest News and updates on Form 10BD:

Goods and Services Tax was introduced in India w.e.f. 1st July 2017. Change is a constant process in today's world. We need to be constantly updated on the changing rules and tax benefits. Lets get to know more about Form 10BD.

What is Form 10BD?

Did you know that philanthropic acts can help you save money on taxes in India? The word 'Charity' connotes an idea of benefiting others than oneself. Charity is a voluntary help either in the form of money or kind to the needy. The various NGOs and non-profit entities play a significant role in promoting economic development and social welfare objectives of the government. Their outreach and more localized approach aids in identifying those in need and providing assistance. As a result, the Indian government has granted such organizations with a variety of tax incentives and exemptions, the most notable of which is Section 80G. To qualify for tax exemption, a trust must devote at least 85 per cent of its income to charity or religious purposes in India.

Form 10BD

Criteria for donation for Form 10BD:

1. Donations should be paid through taxable or exempted income only.

2. Only donations made in cash or by check are qualifies. Whereas, donations made in the form of clothes, food, medicines, etc. are not eligible under Section 80G

3. Only those donations made to valid and registered trusts qualify for deductions.

Documents required under section 80G:

Duly Stamped Receipt:

It is mandatory to have a receipt issued by trust/ charity receiving donation. The receipt should include name, address and PAN number of the trust, amount donated and name of the owner.

Form 58:

Is essential if the donor intends to claim 100% deduction on donation, without which their donation will not be eligible for 100% deduction.

Registration Number of Trust (Form 10BD):

The Income Tax Department assigns a registration number to each qualifying trust, and contributors should check their receipts for this number. This registration number needs to be valid on the date of a particular donation, failing which a donation might be in eligible for deductions.

FAQs on Section 80G and 10BD:

As a non-resident Indian, may I donate to the Prime Minister's Relief Fund and claim a deduction under Section 80G?

-  Yes, because Section 80G applies to both residents and non-resident Indians, you can claim deductions.

I'm a partner in a partnership firm and I'd like to take advantage of Section 80G deductions under 10BD. Is the company eligible for it?

- Yes, under Section 80G, partnership firms are permitted to claim deductions for charitable contributions they make.

I gave a financial donation of Rs.20,000 to a trust that qualifies for a Section 80G deduction. Will I be able to take advantage of the deduction?

- No, under Section 80G, financial donations of up to Rs.2,000 are tax deductible. Any sum in excess of Rs.2,000 will be ineligible for the deduction.

According to experts, tax benefits are more of a hygiene aspect than a fundamental reason for giving. With the new legislation, the average man will now be allowed to receive all of the tax benefits associated with his or her donations. This may encourage them to give even more. This enhances the system's transparency for donations that result in tax exemptions. This will ensure that persons who are not donating but are claiming exemptions will be eliminated, decreasing the government's tax loss. It also provides an accurate picture of the country's 80G donation.

DanaMojo is an integrated payment solutions platform for NGOs that provides, NGOs with directly up-loadable format for all donations made via its platform- both online and offline. Section 80G of the Income Tax Act provides a 50% exemption from paying tax on donations made organizations qualifying under the act.

The best way to save on tax is by donating to charity which is one of the best methods to save money on taxes while simultaneously doing our part to help the world.


Read More: GST: Most Frequently asked questions, Why Does the Vendor Put E.& O.E. on an Invoice

Related Blog Post