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Amendment in section 80G in union budget, 2020

By gkkedia Dt. June 7th, 2020

Section 80G of Income Tax Act, 1961 deals with the deduction in respect of donation made forcharitable purposes to the assesse while computing the Total Taxable income.

The finance bill 2020 proposes some amendments which come into force from 01-06-2020 are as follows:

  • As per the existing provisions of section 80G(5)the institution make an application for approval of registration to the commissioner in Form 10G. Now after amendment institution make an application to principle commissioner for approval. Now power has been granted to principal commissioner for approval of registration application.
  • Now as per the proposed amendment in finance bill 2020, an institution or fund prepares a statement for such period as may be prescribed and delivers to the prescribed income-tax authority or by the person authorised by such authority and verified in such manner as may be prescribed.
  • The institution or fund may also furnish a correction statement for rectification of any mistake or to add, delete or update the information furnished in the original statement. And in the event of failure to do so, fees and penalty shall be levied as per section 234G and 271K of the Income Tax Act, 1961.
  • The institution or fund furnishes to the donor, a certificate specifying the amount of donation, containing such other information and within such time from the date of receipt of donation, as may be prescribed by the authority.
  • As per the statement filed by the institution or fund to the prescribed income-tax authority or the person authorised by such authority regarding the donation received during the year. The same information regarding the donation made to an institution or fund will be reflected in the return of the assesse and deduction 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.
  • Before the amendment the institution who grant a registration certificate u/s 80G(5) need not to apply for renewal of registration unless commissioner withdrawn the exemption. And after the amendment institution requires renewal of registration which are as follows:

 
Existing register institutions

  • Institution registered before amendment proposed by the Finance Bill, 2020 comes into force shall make an application for renewal of registration Within 3 months from the date on which this provision comes into force i.e. by 31st August 2020
  • Principal commissioner or commissioner shall pass an order before expiry of 3month from the end of the month in which application is made
  • Order shall be passed in writing granting it approval for a period of 5 years
  • It becomes effective from the assessment year from which approval was granted earlier to such institutions.

 
Institutions whose registration expire in future

  • Institution whose registration expire in future shall make an application for renewal of registration at least 6 months prior to the expiry of registration
  • Principal commissioner or commissioner shall pass an order before expiry of 6 month from the end of the month in which application is made and
  • Order shall be passed in writing granting it approval for a period of 5 years after call of such documents or information and after satisfying the genuineness of activity of such institutions
  • It becomes effective from the assessment year immediately following the financial year in which application is made.

 
Institutions granted provisional registration

  • An Institution which is granted provisional registration shall make an application for registration at least 6 months prior to the expiry of the provisional approval or with in 6 months of commencement of its activities which ever is earlier
  • Principal commissioner or commissioner shall pass an order before expiry of 6month from the end of the month in which application is made
  • Order shall be passed in writing granting it approval for a period of 5 years after satisfying the genuineness of activity of such institutions
  • It becomes effective from the assessment year immediately following the financial year in which application is made.

 
In any other case

  • And in other case Institutions shall make an application for registration at least 1months prior to commencement of the previous year relevant to the assessment year from which the application is sought
  • Principal commissioner or commissioner shall pass an order before expiry of 1month from the end of the month in which application is made
  • Approval order shall be granted provisionally for a period 3 years from the assessment year from which the registration is sought
  • It becomes effective from the first day of the assessment year for which such institution was provisionally approved.

 
PM Cares Fund
Now a days as all we aware that whole the world are facing problem due to COVID 19 for providing relief to the people government established a Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund which are as follows:

  • A special fund “Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND)” has been set up for providing relief to the persons affected from the outbreak of Corona virus. The Taxations and other laws Ordinance,2020 also amended the provisions of the Income-tax Act to provide the same tax treatment to PM CARES Fund as available to Prime Minister National Relief Fund. Therefore, the donation made to the PM CARES Fund shall be eligible for 100% deduction under section 80G of the Income Tax Act. Further, the limit on deduction of 10% of gross income shall also not be applicable for donation made to PM CARES Fund.
  • As the date for claiming deduction u/s 80G under IT Act has been extended up to 30.06.2020, the donation made up to 30.06.2020 shall also be eligible for deduction from income of FY 2019-20. Hence, any person including corporate paying concessional tax on income of FY 2020-21 under new regime can make donation to PM CARES Fund up to 30.06.2020 and can claim deduction u/s 80G against income of FY 2019-20 and shall also not lose his eligibility to pay tax in concessional taxation regime for income of FY 2020-21.

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