Hence, the burden of compliance has now gradually shifted to charitable organizations. It started from re-validation of registration to avail benefits under section 12A and 80G, followed by charitable organizations with section 80G approval having to file a statement of donations in Form 10BD. Form 10BD for every financial year needs to be filed before 31 May of the immediately following financial year. This is effective from assessment year 2022-23, (for financial year 2021-22) and the due date to file Form 10BD is 31 May.
Impact of this amendment
If we deep dive, this amendment has far-reaching effects beyond compliance.The procedure to avail the section 80G deduction for a donor before the said amendment was quite simple. The charitable trust/ institution just had to ensure that the donation receipt was issued to the donor with a valid 80G certificate. Based on which the donor would easily avail section 80G deduction while filing the income tax return for the donation given. Apart from this, the charitable trust or institution did not have any other obligations to fulfill to ensure that the donor was eligible to claim the benefit of section 80G deduction.
Now, after the amendment, the donor can avail the deduction under section 80G only if the trust or institution (donee) reports the correct information to the I-T department via Form 10BD about the donation. It then issues a certificate (Form 10BE) to the donor. The deduction will be pre-filled while filing the income tax return.
Form 10BD requires the donor name and address, donor unique registration number (Aadhaar, PAN, passport and the like), the date of issue of this unique registration number, the type of donation (whether it is corpus, specific grant, or others), donation receipt mode (cash, kind, cheque, or digital modes), the donation amount (and the currency). Form 10BD can be filed electronically through the income tax e-filing portal. Go to ‘e-File’ > ’IncomeTax Form’ > ‘Form 10BD’ (Persons not dependent on any Source of Income). Fill in the basic information, details of donors and donations, and complete the verification. After all the details are filled, complete the process by e-verification and the form is successfully submitted. Once Form 10BD is filed, Form 10BE can be generated under ‘Filed Forms’. These certificates should be downloaded and issued to all the donors listed in Form 10BD.
Form 10BE is necessary for the donors now to avail section 80G deduction. Hence, if the donee fails to generate this in time or has incorrect or no information about its donors, the donor will not be able to avail the benefit. Next time the donors may reconsider giving any donation to the same charitable trust if claiming Section 80G deduction is a hassle.
Consequences of non-compliance
Any charitable trust/institution receiving donations will need to file Form 10BD for compliance and to give the benefit of section 80G to their donors. If they fail to do so, a penalty of ₹200 per day shall be imposed as per the I-T Act.
Archit Gupta is founder and CEO, Clear.
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