The new rule 18AB of Income Tax Rules applies to all those bodies having approval under sections 80G and 35(1) of the Income Tax Act, 1961. These section allows tax deductions for donors. The filing of a Statement of Donations received during the previous financial year (in Form 10BD) is mandatory by the income tax department. In this particular blog, we will talk about the various Procedure for Filing Form 10BD.
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What is Section 80G and 35(1)?
According to section 80G of the Income Tax Act 1961, the contributions made to certain charitable organizations and relief funds can be asked for a deduction. Under this section, all the donations are not eligible for deduction only donations made to recommended funds qualify as a deduction. however, any taxpayer whether it be individuals, companies, firms or any other person can claim for deduction.
According to the implementation of the amendments to the Income Tax Act 1961, the process for availing tax deductions under Section 80G on donations made to NGOs has changed. This change started from the current financial year which is FY 2022-23.
Section 35(1) talks about the expenditure on scientific research. Under this section, any expenditure (not being like capital expenditure) put out or; spent on scientific research related to the business.
Filing of Statement of Donations – Form 10BD
Statement of donation contains details of donations got in a particular financial year. The filing of the statement of donations got in a financial year shall be done by 31st May, immediately following the financial year in which the donation is received.
The new rule 18AB of income tax rules helps the execution of such a mechanism. Following are the point mentioned in the rule:
- The statement of particulars needs to be provided by any research association, university, college or other institution or company or fund under the:
- section 80G sub-section (5) Clause (vii); or
- section 35 sub-section (1A) clause (i)
- Statement of donation shall be provided in respect of each financial year beginning with the financial year 2021-2022, on or before 31st May in the subsequent year.
Previously, the donor only had to provide the receipt got from the NGO as proof of donation. But, from FY22-23, the burden of submission is now shifting to the NGOs (charitable organizations). Now, these organization needs to file a Statement of Donations in Form 10BD by 31st May of each financial year. They will also have to provide the donor in the form of a consolidated Donation Receipt in Form 10BE (downloaded from the Income Tax portal).
Specified institutions and funds covered under the compliance
The specified institutions and funds covered under the compliance are:
- Section 80G sub-section (5) Clause (vii); or
- Section 35 sub-section (1A) clause (i)
Necessary Documents and Details
Following are the necessary documents and details for filing form 10BD:
- Name of Donor*
- Address of the Donor
- ID and ID Proof (PAN or Aadhar or Passport or Driving License) of donor
- Issuing date of the above ID by the capable authority
- Type of Donation like Corpus, Specific/Restricted Grant, etc.
- Mode of Receipts like Cash, cheque, Electronic, or any other mode
- Amount (In INR).
*Donor comprises Individual Indians, NRI, OCI, Foreigner, Company, Partnership Firms, LLPs and many more.
Procedure for filing form 10BD
The procedure for filing form 10BD should be handled by an experienced professional accountant of the organization or by a Chartered Accountant / Auditor. Following is the process to file a statement of donation:
- Access the Income Tax Portal using the organisation’s Income Tax Login ID and Password which is used for filing Income tax returns;
- Now form 10BD is available online under the tab “E-File”
- Click on “Income Tax Forms” under e-file and search for Form 10BD
- Using “Download Template” in Part B of the form download format of the details which as to be filled
- The template will be in excel format
- Write the details of the donor in the “Requirement” section
- Then save the excel file and converted it to a .csv file online through an external portal
- Download the converted file and upload it again on the link on the Form 10BD
- If any errors occur in the form, then they will be specified in Part B Online Form
- Preview and verify the form online after this the submission will be complete.
E-verification of Form 10BD is compulsory either through DSC or EVC-4.
It is important to confirm the details of the Principal officer or Authorised Signatory are up to date in the ‘My Profile’ before Submitting the form. Further, it is also important to confirm that the DSC of the principal officer or authorized signatory is registered or not before submitting the form.
Certificate of Donation in Form 10BE
After filing of Statement of Donations in Form 10BD, make sure to download and issue a Certificate of Donations in Form 10BE. Because this certificate comprises information about the charitable organizations like the name and PAN of the NGOs, approval numbers under sections 80G & 35(1) of the income tax Act, along with details of the donor and donation.
Penalty for not filing
All the organizations must file Form 10BD. In the case of failure, they have to pay a fine of Rs.200/- per day of delay under section 234G. Further, failure to file such a statement will have to pay penalty mentioned under section271K, which shall not be less than Rs. 10,000/- and more than Rs.1,00,000/-.
Conclusion
Therefore, it is clear that previously the donor only had to provide the receipt got from the NGO as proof of donation. But, from FY22-23, the burden of submission is now shifting to the NGOs (charitable organizations). Now, these organization needs to file a Statement of Donations in Form 10BD by 31st May of each financial year. So, in my opinion, such organizations shall maintain a donor register and capture all the details all through the year to simplify the ease of filing this form year after year.
