Increased I-T Scrutiny What NGOs & HNIs Must Know
The Income Tax Department has intensified scrutiny of NGOs and HNIs in recent years. From tighter checks on donations to re-examining old cases, tax officers are actively verifying exemptions, source of funds, and past filings.
This blog explains how NGOs and high-net-worth individuals can manage increased I-T scrutiny smoothly and avoid penalties.
Why is I-T Scrutiny Rising for NGOs and HNIs?
Here’s why the tax department is stricter now:
- Unverified Donations: Fake or inflated donation claims trigger 80G scrutiny.
- Mismatch in ITR & Annual Information Statement (AIS): High-value transactions flagged automatically.
- Past Cases: Reopened under Section 148A if new evidence found.
- Regulatory Push: CBDT guidelines on proper use of tax exemptions.
Legal Reference:
- CBDT Instruction No. F. No. 225/135/2023/ITA-II on targeted verifications.
- Section 148A, Income-tax Act, 1961 for re-opening assessments.
How NGOs Can Stay Compliant
NGOs must follow these best practices to avoid harsh scrutiny:
✅ Maintain updated registration under Section 12AB & 80G.
✅ File Form 10B/10BB audit reports on time.
✅ Keep proper donor records with PAN, mode of receipt.
✅ Avoid cash donations above ₹2,000 as per Section 80G(5D).
✅ Reconcile Form 10BD (donor list) with actual receipts.
How HNIs Can Minimise Tax Risk
High-net-worth individuals should take these steps:
✔️ Disclose all foreign assets under Schedule FA.
✔️ Match AIS and Form 26AS before filing ITR.
✔️ Keep supporting documents for large deductions.
✔️ Plan transactions to avoid sudden high-value cash movements.
✔️ Use registered valuers for high-value property transfers.
What to Do if You Get a Notice
👉 Don’t ignore notices — respond within deadlines under Section 142(1) or 148A.
👉 Seek professional help to draft replies.
👉 Provide requested documents promptly.
👉 File revised returns if genuine errors exist.
Expert Tip:
Consider a pre-filing audit by your CA to catch mismatches early — this reduces notice risk by up to 70%.
FAQs
Q1. Can old tax cases be reopened?
Yes. Under Section 148A, cases up to 10 years can be reopened if new information surfaces.
Q2. Are donations above ₹2,000 in cash allowed?
No. Cash donations above ₹2,000 are not eligible for 80G deduction.
Q3. What is AIS?
The Annual Information Statement shows your high-value transactions. Always check it before filing ITR.
Summary
NGOs and HNIs face stricter I-T scrutiny today. File returns accurately, verify AIS, and maintain proper records to avoid penalties. Always consult experts for complex cases.
Stay Compliant with Efiletax
Facing a tax notice or audit? Our experts help NGOs and HNIs file correct returns and handle I-T queries with ease. Contact Efiletax today for trusted support.