Collect Form 10BE before May 31 for availing tax deduction under Sec 80G

Check the information therein carefully and get any error corrected before this deadline

From the 2022-2023 financial year (FY23), the method for availing tax deduction under Section 80G on donations made to eligible trusts and institutions has changed. Earlier, the donor only had to provide the receipt obtained from the donee (or recipie­nt) organisation as proof. From FY23, the donor must provide Form 10BE which should be obtained from the donee organisation before May 31.

Section 80G amended

Section 80G of the Income-Tax (I-T) Act was amended by the Finance Act 2021 and a new provision was inserted, under which, every organisation (approved under Section 80G) must file Form 10BD with the I-T department. This is a statement that will carry all the details of the donations received by it.  The I-T department recently issued an instruction for filing Form 10BD while making it available.

Pratyush Miglani, managing partner, Miglani Verma & Co says, “Besides the aggregate amount of donation received, the donee organisation must also offer a breakup of the amount received from each individual. If repeated donations were made, that information must also be provided.”

Anushkaa Arora, principal & founder, ABA Law Office adds, “This new form has to be filed on or before May 31 immediately following the financial year in which the donation was received by the donee organisation.”

She also says that this is an online form and all particulars need to be furnished electronically.

Research institutions, colleges, universities and other institutions under Section 35(1A) of the I-T Act also need to furnish Form 10BD.

Aim is to check validity of claims

Until FY21, the donor submitted the receipt obtained from the donee organisation as proof that the donation was made. However, no system existed for the I-T department to cross-check the validity of the deduction claimed under Section 80G.

Maneet Pal Singh, partner, I.P. Pasricha & Co says, “Form 10BD will help the government and the I-T department check the accuracy of the claims regarding donations. Once this form is filed electronically, it will reflect in the donor's Form 26AS.”

Donor must obtain 10BE

For donors, the method of obtaining Section 80G deduction has changed. Adesh Agarkar, senior associate, Victoriam Legalis, says, “After the ame­n­dment, Section 80G deduction will only be available if the trust or institution rep­o­r­ts the correct information about the donor to the I-T department via Form 10BD. It must also issue a certifica­te of donation to the donor.”

Singh adds, “The donor will be able to avail of tax deductions based on this certificate only and it must be obtained from the donee organisation.”

The donee organisation needs to download Form 10BE from the tax portal and issue a certificate to the donor.

Sandeep Bajaj, managing partner, PSL Advocates & Solicitors says, “This certificate will contain details of the donee organisation, such as its name, its Permanent Account Number, approval numbers under Section 80G or Section 35(1) of the I-T Act, along with details of the donor and the donation made.”

The last date for issuing Form 10BE is also May 31.

Beat the May 31 deadline

Form 10BE will be beneficial for donors. “In case the I-T department rejects, or puts under scrutiny, the deduction claimed by the assessee in the tax return, Form 10BE can come to the rescue,” says Bajaj.

Taxpayers must ideally obtain Form 10BE from the donee organisation before May 31 and cross-check the details contained therein. If there is an error, they must get it rectified by the donee organisation at the earliest. Once the latter files incorrect information with the I-T department in Form 10BD, the taxpayer could face difficulty. This is because the procedure for rectifying the inaccuracies in this form has not been laid down so far.
 

Making the most of Section 80G

An individual, firm, company or any other person, including non-resident Indians, can claim a deduction under Section 80G.

Depending on the nature of the donation, a deduction can be claimed either up to 100 per cent of the donation or 50 per cent.

In some cases, the deduction that can be claimed on donations is limited to 10 per cent of the adjusted gross total income of the taxpayer.

If a taxpayer’s donations are likely to exceed this level, she/he should identify donations that are allowed without any such restriction, for example, to the PM CARES Fund.

Deduction can be claimed only under Section 80G on donations made only via cheque or cash.

Donations in kind (say, of laptop, food packets, clothes, etc.) or cash donations exceeding Rs 2,000 are not eligible for deduction.