Transcript Slide 1
I NCOME
TAX
2
NPO TAXATION
12A
• Receipts > 1.5
lakh
• Required
• No tax on Income
80G /
35AC
TDS
• Raising Funds?
• Optional
• Tax deduction for
donors
• Large Payments?
• Compulsory
• Deduct & Deposit
Tax
PAN / TAN
3
Permanent Account Number (PAN)
Form 49A
Apply before filing return
7-10 days
Tax Deduction Account Number (TAN)
Form 49B
Apply when deducting Tax
12A E XEMPTION C ONDITIONS
4
Charitable activities
Minimum spending 85%
Arm’s length transactions with key persons
Keeping funds in approved modes
Filing tax return annually
U NSPENT F UNDS ?
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Upto 15%
• Indefinite Accumulation
Temporary under-spending
• Use up next year
• Carry forward Letter
Long Term Project
• Accumulate up to five years
• Form 10; Board Resolution
6
K EY P ERSON PAYMENTS
Key
Persons?
Payments?
Care?
Implications
• Managers, Trustees, Board Members,
• Large donors
• Related parties
• Salary, etc.
• Use / sale / purchase of property
• Identified and approved
• Disclosed – form 10B
• Reasonable
• Loss of Tax Exemption
A NNUAL TAX R ETURN
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Due Date
• 30th September
Penalty
• Rs. 100 per day
Enclosures
Form?
• Audited Consolidated Accounts
• Form 10B with annexure
• TDS Certificates
• Carry forward letter etc.
• ITR 7
N EW ITR 7
8
Revised
Form
Information
Sought
• ITR 7
• Sec. 2(15)
• Objects of general public utility?
• Business Activities?
• Business Turnover?
• FCRA
• Registration?
• Amount Received?
A UDIT R EPORT
9
Form
Prepared
by
Shows
• 10B
• Auditor
• Amount
• Spent (incl. fixed assets)
• Set apart
• Carried forward
• Payments to key persons
D ONATIONS
80G A PPROVAL
11
Donor’s
Benefit
• 50% deduction from taxable income
Validity
• Lifelong
Form
Documents
needed
Cash
Donations
• 10G
•
•
•
•
12A registration
Trust Deed / Bylaws
Audited Accounts (up to 3 yrs.)
Activity Report (up to 3 yrs.)
• No deduction to donor above Rs. 10,000
35AC A PPROVAL
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Donor’s
Benefit
• 100% deduction from taxable income
Validity
• 3-5 years
• For specific project only
Formalities
• Apply to National Committee (Form)
• Issue certificate to donors (58A)
Documents
needed
•
•
•
•
•
•
12A registration
Trust Deed / Bylaws
Audited Accounts (up to 3 yrs.)
Activity Report (up to 3 yrs.)
Project Proposal
Project Budget
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A NONYMOUS
Problem
Section
Applies to
Restriction
Impact
Solution
DONATIONS
• Donors w/o name and address
• 115BBC
• Wholly Charitable Organisations
• Higher of 1 lakh or 5% of donations
• Pay tax @ 30% on excess
• Encourage cheque donations
• Record donor’s name and address
S PECIAL I SSUES
B USINESS -L IKE A CTIVITIES
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16
T HE C HARITABLE T RUNK
12A
80G
35AC
Donor
Incentives
10(23)(c)
I Tax
Exemption
Charitable
Purpose
S EC . 2(15)
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Relief of the
Poor
Conventional
Education
Medical
Relief
Charitable
Purpose
Environment
Modern
Monuments
/ Culture
Dynamic
Other useful
purpose
Business ≤25
lakh
D EALING
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WITH
2(15)
Ensure business is
Incidental
Gross revenue ≤ 25 lakh
If not, spin off as a separate organisation
Form of organisation?
For-profit forms
NPO w/o tax exemption
I NCIDENTAL B USINESS
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Incidental?
Only activities connected with main objects
Gross Business Turnover
Any amount for first five categories
≤ 25 Lakh for Sixth Category
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B USINESS : A CCOUNTING / A UDIT
Separate books of account – sec. 11(4A)
Attach Audited P&L A/c
Transfer profit to main I&E A/c
Form 3CD audit report if
Fees Turnover > 25 lakh
Sale Turnover > 1 crore
F URTHER R EADING
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Accountable 15 : Basics of Tax Registration
Accountable 16 : Income Tax Return
Accountable 91 : Income Tax Exemption
Accountable 141 : Charitable purpose and Income Tax
Auditable 2 : Charitable Purpose - 1
Auditable 3 : Charitable Purpose - 2
Accountable 142 :Eleventh Commandment
Accountable 143 : Taxation Tricks and Traps
Auditable 12 : Taxing NGO Programs Outside India