NGO Can Claim 80G Tax Benefits Despite Filing Error: ITAT Clarification
Focus Keyphrase: 80G tax benefits
In a relief to charitable trusts and donors alike, the Income Tax Appellate Tribunal (ITAT) has ruled that 80G tax benefits cannot be denied merely due to technical errors in Form 10B filing. This ruling clarifies that compliance lapses should not override the genuine charitable activities of NGOs.
Let’s break it down in simple terms.
What Happened in the ITAT Case?
- The case involved Kavita Foundation, a registered NGO eligible for tax exemption under Section 12AA and Section 80G of the Income-tax Act, 1961.
- The NGO missed uploading Form 10B (audit report) along with its return of income for the relevant AY.
- The Assessing Officer denied 80G benefits, citing non-compliance.
- On appeal, the CIT(A) upheld the denial.
But the ITAT ruled in the NGO’s favour.
Why This ITAT Ruling Matters
The ITAT relied on:
- CBDT Circular No. 2/2020 dated 03.01.2020
- Judicial precedents such as:
- Commissioner of Income Tax vs. Xavier Institute of Management (Delhi HC)
- PCIT vs. Krupanidhi Educational Trust (Karnataka HC)
Key Finding:
If the trust’s activities are genuine and the audit report (Form 10B) is submitted later during assessment, the benefit under Section 80G should not be denied solely on procedural grounds.
Key Compliance Requirements for 80G Tax Benefits
To avoid litigation, NGOs and donors should ensure:
| Requirement | Mandatory? | Notes |
|---|---|---|
| Registration under 12AB | Yes | New regime applicable post-April 2021 |
| 80G Certificate from IT Department | Yes | Must be active and renewed periodically |
| Filing Form 10B (Audit Report) | Yes | Should be uploaded with ITR; late filing needs reason |
| Reporting donations via Form 10BD | Yes (for NGOs) | From AY 2022–23 onwards; donors can check via AIS |
Expert Tip: Use Condonation of Delay
If Form 10B or 10BD is filed late, NGOs can apply for condonation under Section 119(2)(b). The CBDT has been allowing delays in genuine cases.
📌 Pro Tip for Donors:
Always check if the NGO’s 80G is active and your PAN is reflected in their Form 10BD to claim deduction.
Subheading with Keyphrase
How This Impacts 80G Tax Benefits for Donors and NGOs
- NGOs won’t automatically lose 80G status due to minor filing errors
- Donors can claim deductions even if the NGO missed a procedural step — as long as it’s later rectified
- Builds judicial precedent against harsh disallowance for technical lapses
- Helps build trust between compliance-focused NGOs and donors
FAQs on 80G Tax Benefits
Q1: Can I still claim deduction if NGO filed Form 10B late?
Yes, if the ITAT precedent applies and the NGO’s activities are genuine, you can still claim deduction.
Q2: What if NGO didn’t file Form 10BD?
You may not get deduction unless the NGO files Form 10BD and includes your PAN.
Q3: What is Form 10BD and how is it different from 10B?
- Form 10B = Audit Report for NGO
- Form 10BD = Statement of Donations for donor reporting
Final Thoughts
This ITAT ruling is a relief for honest NGOs and their donors. Procedural lapses shouldn’t override the intention of the law — which is to encourage genuine charity. NGOs must stay alert on audit/reporting deadlines, but relief is possible through legal routes like condonation.
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Summary
ITAT ruled that 80G tax benefits can’t be denied due to a technical delay in Form 10B filing. Genuine NGOs can seek relief under CBDT Circulars and legal precedents.