Ensure donations claimed in tax returns match Form 10BE figures

Retain Form 10BE and related documents for at least four years to validate Section 80G claims

If you have donated to eligible trusts and institutions qualifying for tax benefits under Section 80G, you must obtain Form 10BE from them. Previously, donors only needed to provide a receipt from the recipient organisation as proof. From 2022-23 (FY23), the donor must provide Form 10BE which should be obtained from the donee organisation before May 31.

The background

Section 80G was amended to mandate approved organisations to submit Form 10BD to the Income-Tax (I-T) Department. “To streamline the process of verification of donations received by charitable organisations approved under Section 80G of the I-T Act with the deduction for donations claimed by donors in their respective income-tax returns (ITRs), Section 80G of the I-T Act, 1961, was amended in 2020 to mitigate the risk of bogus donation claims by taxpayers,” says SR Patnaik, partner, Cyril Amarchand Mangaldas.

Section 80G certified

Some institutions, that have the Section 80G certificate, are eligible to receive donations under the tax laws. “Essentially, it allows them to accept contributions for which donors can claim deductions. While you might receive a copy (receipt) for your records, it’s not the document you need for claiming tax benefit,” says Ritika Nayyar, partner, Singhania & Co.

Understanding 10BD

It is a statement that contains all the details of the donations received by an institution. The form electronically captures details about the donors, the type of donation (cash or kind), and the amount donated. The recipient institution must file this form electronically using a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC) by May 31 following the financial year in which the donations were received.

“If no donation is received during a financial year, Form 10BD doesn’t need to be filed,” says Adithya Reddy, an international tax lawyer. Form 10BD enables the government and the I-T Department to verify the accuracy of donation claims. Upon electronic filing, this form gets reflected in the donor’s Form 26AS.

Understanding Form 10BE

After the amendment, the recipient institution must report donor-related information via Form 10BD and issue a donation certificate (Form 10BE) to the donor.

“To avail of these deductions, individuals need to receive a certificate of donation in Form 10BE from the charitable institution. This serves as proof of the donation. The last date for issuing Form 10BE for a particular financial year is typically May 31 of the assessment year immediately following the financial year in which the donation was made. This allows individuals to include the donation details in their income tax return (ITR) filings for that assessment year,” says Alay Razvi, partner, Accord Juris LLP.

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

What should you do?

Donors should follow up with the donee institutions if they do not receive the certificate in Form 10BE by the due date. “Donors should ensure that the donation amount claimed by them under Section 80G of the I-T Act in their respective ITRs matches with the aggregate donations reflected in Form 10BE issued to them for the relevant period by the respective charitable organisations,” says Patnaik.

Take this matter seriously. “If there’s a discrepancy between the deduction claimed under Section 80G in your ITR and Form 10BE issued by donees, the tax authorities may launch scrutiny proceedings. Donors should ensure they have proper documentation and proofs to support the total donations claimed in their ITRs,” says Patnaik.

Enter the information in Form 10BE into the specified fields in Schedule 80G, including the institution’s name, registration number, and donation amount. “Additionally, for your records and documentation, retain copies of donation receipts (Form 10BE) and relevant documents like bank statements for at least four years after filing your return for claiming deductions under Section 80G,” says Nayyar.

Must-know facts about Section 80G

• Section 80G deduction is allowed from gross total income

• Under Section 80G of the Income-Tax (I-T) Act, 1961, taxpayers can claim deductions on donations made to certain charitable institutions.

· The deductions can range from 50 per cent to 100 per cent of the donated amount, without any qualifying limit

•  The donation must be in the form of money: Donations in the form of goods or services are not eligible for deduction

• Only taxpayers who opt for the old tax regime while filing ITR can claim this deduction; taxpayers who have chosen the new tax regime are not entitled to this benefit