ITR Filing FY 23-24: Missing Form 10BE! Why Donors are forgoing the Benefits of Tax Deductions?

What started as an initiation to decrease the inconveniences associated with obtaining tax deductions for donations and eliminating the fraudulent claims u/s 80G of Income Tax has turned into a nightmare for donors.

Many taxpayers are unable to claim deduction under this section for donations made to several temple trusts and an education-based non-governmental organization, due to non-availability of specific certificate which is Form 10BE to claim deduction for these donations.

Up until Assessment Year 2023-24 (for income earned or donations made in the financial year 2022-23), taxpayers were only required to share the organization’s name, Permanent Account Number (PAN), and the amount donated to claim the 50% tax deduction (100% for specific organizations) against his taxable income under Section 80G.

Now, donors must undertake a two-step process:

Step 1: Obtain a donation receipt at the moment of the donation.

Step 2: After the financial year closes, obtain a donation certificate or Form 10BE to claim the tax benefit in the income tax returns.

The Section 80G tax deduction is not available to people who have chosen the new tax regime.

Following the announcement by the government that donation details would be prefilled in tax returns in 2020, similar to tax deduction at source details, charitable trusts and NGOs were required to undertake certain processes.

Problems being faced by the Organizations

It should be noted that most non-government organizations (NGOs) lack a coordinated backend and software solutions to manage this compliance burden.

Many Organizations were not able to fill out this form with donor information due to lack of proper records, upto May 31 deadline.

Problems with Doner

In the meantime, donors forget about their donations, and some even lose the receipts. If the organization sends receipts and accepts donations online, you can still contact them and request Form 10 BE before completing your tax returns.

You cannot claim the deduction on your tax returns until you receive Form 10BE from the charitable trust or NGO.

To claim the donation on their tax returns, the donor must have an ARN number. This is found in Form 10BE. However, many organisations don’t generate this at the point of donation. Neither do all temples or religious organisations acquire your email address in order to send you Form 10BE later, when they have submitted the details to the government and generated it.

Many smaller donations of Rs. 500-2,000 entail too much work on the taxpayer’s part, and they would rather forego the benefits than subject themselves to such suffering.

Donation data not prefilled in AIS as promised

Furthermore, the data on donations has not been prefilled in returns because the systems are being updated and matching the details takes time. On the positive side, the number of fake donation claims has significantly decreased since the change was made.

The amendment ensures that persons who do not donate but claim exemptions are screened, lowering the government’s tax loss and providing a realistic picture of Section 80 G donations in the country.

The next time you donate, make sure you provide your accurate email address so that the organization may contact you for Form 10BE.