A Non Government Organizations is established for the welfare of the society they need some financial assistant to run their welfare related works. These organizations arrange their funds through donations made to them by the governments or other individuals or corporate bodies. So to attract the finance for these welfare organizations the government has provided some tax reliefs and benefits to those making donations. The Income Tax Act has certain provisions which offer tax benefits to the \”donors\”. All NGOs should avail the advantage of these provisions to attract potential donors. Section 35AC is one of such sections. But this section provides benefir to only those assessees who have income from the head ‘business’ or ‘profession’ Under section 35AC, Organisations having income from business or profession can get 100 per cent deduction. Charitable Organisations can get registered themselves u/s. 35AC by applying to the National Committee under rule 11F to 11-O, if they are carrying on any business. The approval under section 35AC is for three years only and not permanent in nature.
Registration under Section 35AC:
The Central Government approves certain NGOs and notifies them as eligible for project or schemes for the purposes of section 35AC. If an NGO succeeds in getting such an approval for its projects then it stands a very good chance of mobilising funds from the corporate and the business sector. Business houses making contribution to such approved projects are allowed the benefits of deducting such contribution as expenditure.
Application: The application for approval shall be made to the National Committee, constituted by the central government to identify projects and schemes to be notified under section 35AC. The application shall be made to the Secretary, National Committee for Promotion of Social & Economic Welfare, Dept. of Revenue, Govt. of India, North Block, New Delhi – 110001 along with the following documents:
Details such as name, address and status of applicant, the district/ ward circle where assessed/PAN number. How is it constituted i.e. whether as a trust, society, etc supported by relevant documents like trust deed, rules & regulation, memorandum of association etc. and registration certificate, if any. If the association or institution is notified under section 10(23)(C) or is approved for the purposes of section 80G, the particulars of such approval granted. Such other information as the association or institution may like to place before the National Committee.
In addition to the above mentioned document the following project related documents required to be submitted:
Date of commencement; Estimated cost of the project ; Affirmation that no benefit from the project or scheme other than remuneration or honorarium, will accrue to persons managing the affairs of the NGO ; Name of the contributors & their addresses Amount of contributions Total amount of contribution received during the year Such Annual Report should reach the National Committee by 30th June, following the financial year in which the amount is received.