I-T Department Clarifies New Compliance Rules for Charitable Institutions

On Friday, the income-tax department said that any public charitable trusts and societies that promote charitable activities are compulsorily needed to obtain its registration. Educational and medical institutions that are solely involved in charitable activities and wish to claim tax exemptions are also required to obtain this registration under the relevant exemption provisions.

The Income Tax Commissioner (Exemptions), B. Balakrishna, explained that an organisation will get tax exemption only if it follows certain basic rules. It must keep proper financial records, get its accounts audited, and submit the audit report on time. It also has to file a statement showing how its income was used or saved and make sure its investments are only in the forms allowed by the Income Tax Act. All these reports and the income tax return must be filed before the due date every year.

He added, “Non-profit organisations that are duly approved by the income-tax department can issue Section 80G Certificates to donors. The I-T department introduced many changes to the procedures and laws, effective April 1, 2021 to leverage technology such as the online issue of provisional registration, regular registration and re-registrations.”

He explained that educational institutions that receive major financial support from the government, as well as private educational institutions with annual income below Rs 5 crore, do not need to get special registration for tax purposes. However, they still must file their income tax returns every year. Non-profit organisations (NPOs) that are approved under Section 80G must submit their annual statement by May 31 of the following year. Donors can claim tax deductions on their donations only if the NPO files this statement on time.

Commissioner further added that the NPOs were advised to utilise the funds only for the objectives specified in the original registration deed and not for any other purposes. The I-T commissioner can cancel the entity’s registration and enforce taxation in case of any violation.

The Income Tax Department office that handles tax exemptions for Telangana and Andhra Pradesh is led by the Commissioner of Income Tax (Exemptions). This office is located at Ayakar Bhavan in Basheerbagh, Hyderabad.