Who is Eligible for 80G?

Section 80G of the Income Tax Act, 1961 offers tax benefits to individuals and entities who donate to charitable institutions and funds in India. However, for a donor to avail of these tax deductions, the recipient organization must have valid 80G registration. In this article, we’ll explain who is eligible for 80G, the conditions involved, and why 80G registration is critical for both donors and donees.

What is 80G Registration?

80G registration is a certification granted by the Income Tax Department of India to non-profit organizations and charitable trusts. This certification enables donors to claim deductions on the amount donated to the organization, thereby encouraging philanthropy.

The primary goal of 80G registration is to promote donations to NGOs, charitable societies, and religious trusts by offering tax relief. Only those institutions that have obtained 80G registration are authorized to issue donation receipts that are valid for tax deduction purposes.

Who Can Apply for 80G Registration?

Organizations that wish to obtain 80G registration must meet certain eligibility criteria set by the Income Tax Act. Below are the entities eligible to apply for 80G registration:

1. Charitable Trusts

Registered charitable trusts under the Indian Trusts Act, 1882 are eligible for 80G registration. These trusts must operate for charitable purposes such as education, relief to the poor, medical relief, and preservation of the environment.

2. Societies

Societies registered under the Societies Registration Act, 1860 or corresponding laws in states are also eligible for 80G registration, provided they work toward non-profit objectives.

3. Section 8 Companies

Section 8 companies, registered under the Companies Act, 2013, that promote charitable activities such as arts, science, commerce, religion, or environmental protection can apply for 80G registration.

4. Religious Institutions (with conditions)

While general religious organizations are typically excluded from 80G registration, those that use donations for social welfare, education, or healthcare—regardless of religious affiliation—may be considered, subject to specific scrutiny by tax authorities.

Conditions for Eligibility

Even if an organization falls into one of the above categories, it must meet certain conditions to obtain 80G registration:

• Non-profit Nature: The organization must not be involved in any activity that is profit-oriented. Surplus funds, if any, should be used only for charitable purposes.

• Proper Bookkeeping: The entity should maintain proper books of account and records of its financial activities.

• No Dividends or Profit Distribution: No part of the organization's income should benefit any trustee, member, or related party.

• PAN Requirement: The entity must possess a valid Permanent Account Number (PAN) before applying for 80G registration.

• Timely Filing of Returns: The organization should file its income tax returns regularly to demonstrate compliance with Indian tax laws.

• Use of Donations: At least 85% of the donations received should be used for charitable purposes in India.

Who Can Claim Tax Benefits Under 80G?

Any taxpayer—individual, Hindu Undivided Family (HUF), company, partnership firm, or LLP—can claim deductions under Section 80G if they donate to an entity with valid 80G registration. However, the deduction amount varies based on the nature of the donation:

• Donations eligible for 100% deduction without qualifying limit.

• Donations eligible for 50% deduction without qualifying limit.

• Donations eligible for 100% deduction subject to qualifying limit.

• Donations eligible for 50% deduction subject to qualifying limit.

To claim the deduction, the donor must ensure the donation is made via banking channels (cash donations above ₹2,000 are not eligible) and should collect the donation receipt that includes the 80G registration number of the donee organization.

How to Verify 80G Registration Status?

Before making a donation, it's wise to verify whether the institution has valid 80G registration. This can be done through:

• Checking the organization’s official website or donation receipts.

• Visiting the Income Tax Department’s NGO portal and searching by the PAN or name of the entity.

If the organization fails to maintain compliance, their 80G registration can be revoked, and donors will not be eligible for tax benefits.

Benefits of 80G Registration for NGOs

For non-profits and charitable institutions, obtaining 80G registration offers numerous advantages:

1. Credibility Boost: It enhances the credibility of the organization in the eyes of donors and regulatory authorities.

2. Attract More Donors: Donors prefer contributing to organizations where they can receive tax deductions.

3. Tax Exemption Status: Along with 12A registration, 80G registration helps NGOs operate without paying income tax on surplus income.

4. Eligibility for Government Grants: Many government schemes and grants require the organization to have 80G registration.

Conclusion

To summarize, 80G registration is a critical certification for any non-profit or charitable entity seeking donations in India. Eligibility is not limited to just one type of organization—it includes charitable trusts, societies, and Section 8 companies, provided they adhere to specific compliance norms. For donors, verifying 80G registration is essential to ensure they can claim appropriate tax deductions. As the Indian economy grows and social responsibility becomes a priority, 80G registration serves as a vital bridge between public goodwill and sustainable charitable efforts.