November 30, 2024 Legal Compliance 0

I. Eligibility Assessment & Guidance:

Section 35AC:
- Project Eligibility: Determine if the NGO’s project qualifies for tax benefits under Section 35AC. This involves understanding the project’s nature, objectives, and alignment with the specified eligible projects notified by the National Committee for Promotion of Social and Economic Welfare.
- NGO Eligibility: Assess whether the NGO meets the criteria to receive donations eligible for deduction under Section 35AC, including registration status, track record, and financial management practices.
Section 23C:
- Institution Eligibility: Determine if the NGO qualifies as a “charitable institution” or “scientific research association” eligible for exemption under Section 23C. This includes reviewing the NGO’s objectives, activities, and governing documents.

II. Application Assistance:

Form 56/Form 56A:
- Guide NGOs in obtaining Form 56 or Form 56A from the National Committee for Promotion of Social and Economic Welfare (for 35AC) or the relevant assessing officer (for 23C).
Document Preparation:
- Assist in compiling the necessary supporting documents, such as:
  - Registration certificate
  - Project proposal or feasibility study
  - Audited financial statements
  - Project budget and implementation plan
  - Other relevant documents specific to the project and the NGO.
Application Submission:
- Help NGOs submit complete and accurate applications to the relevant authority.
- Track the application status and communicate with the authorities regarding any queries or requirements.

III. Ongoing Compliance Support:

Project Monitoring & Reporting:
- Advise NGOs on maintaining proper records and documentation related to projects or activities funded through donations under Sections 35AC or 23C.
- Assist with preparing progress reports or utilization certificates for submission to the relevant authorities.
Tax & Regulatory Updates:
- Keep NGOs informed about any changes to tax laws, regulations, or eligibility criteria related to Sections 35AC and 23C.

IV. Additional Services (Integrated Solutions):

12A & 80G Registration:
- Help NGOs obtain these essential tax exemption certifications that are often required along with or as a prerequisite for benefiting from Sections 35AC and 23C.
FCRA Compliance:
- If the NGO receives foreign funding, ensure compliance with the Foreign Contribution (Regulation) Act (FCRA).
Accounting & Audit Services:
- Provide bookkeeping, accounting, and audit services to ensure the NGO maintains accurate financial records and transparency, which is crucial for maintaining tax-exempt status.

FAQs: Understanding Tax Benefits for NGOs – Sections 35AC & 23C

1. What are Sections 35AC and 23C of the Income Tax Act, 1961?

These sections provide valuable tax benefits to NGOs:

Section 35AC: Allows companies making donations to specific projects approved by the National Committee to claim 100% tax deduction on their contributions.
Section 23C: Grants tax exemption to certain charitable and scientific research institutions on their income.

2. How does Section 35AC work?

Eligible Projects: The National Committee identifies specific projects in areas like education, healthcare, poverty alleviation, and environmental protection.
Corporate Donations: Companies can donate to these approved projects and claim a 100% deduction from their taxable income.
NGO Benefits: This encourages corporations to contribute to impactful social projects, providing NGOs with a valuable funding source.

3. How does Section 23C work?

Eligible Institutions: This section applies to charitable institutions and scientific research associations that meet specific criteria.
Income Exemption: Income from certain sources, such as donations, investments, or activities related to the institution’s objectives, may be exempt from income tax.

4. Is my NGO eligible for benefits under these sections?

Eligibility depends on various factors:

For Section 35AC:
- Your project must align with those approved by the National Committee.
- Your NGO needs a proven track record and sound financial management.
For Section 23C:
- Your NGO’s objectives and activities must fall under the definition of “charitable” or “scientific research.”
- You must meet registration and compliance requirements.

The CauseConnect Team can assess your eligibility and guide you through the process.

5. How can my NGO benefit from Section 35AC?

Attract Corporate Funding: Section 35AC makes your projects more attractive to corporations seeking CSR (Corporate Social Responsibility) spending avenues.
Increase Donations: The 100% tax deduction incentivizes larger contributions from companies.

6. What are the benefits of Section 23C for my NGO?

Tax Savings: Exemption under Section 23C reduces your tax burden.
More Resources for Your Mission: Funds saved on taxes can be directed towards your programs and beneficiaries.

7. What is the process for claiming benefits under these sections?

Section 35AC: You need to obtain Form 56/56A from the National Committee or assessing officer and submit a detailed project proposal.
Section 23C: You need to apply for exemption to the Income Tax Department, demonstrating your charitable or scientific research status.

We provide step-by-step guidance and support throughout the application process.

8. What kind of support does The CauseConnect Team offer?

We provide comprehensive assistance:

Eligibility Assessment: We determine if your NGO and project qualify for these benefits.
Application Preparation: We help you gather the required documents and complete the application forms correctly.
Submission & Follow-up: We handle the application process and communicate with the relevant authorities.
Compliance Support: We ensure you meet the ongoing reporting and documentation requirements.

9. How can I ensure my NGO stays compliant with these sections?

Maintain Accurate Records: Keep detailed records of your project activities, finances, and donor contributions.
Follow Reporting Requirements: Submit necessary reports and utilization certificates to the authorities.
Stay Updated: Keep abreast of changes to tax laws and regulations.

10. How can I get started with The CauseConnect Team?

The CauseConnect Team: Your Partner for Seamless Import/Export Compliance & Success.

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