80g receipt from ngo or charitable trust for donations

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

06 December 2012 Dear Experts,

I have a query regarding the donations made to charitable trusts/NGO.

We are a "For profit" organisation,we raise funds for NGOs on their behalf, and we keep a margin/service charge from all the donations collected from donors.I understand that our 15% margin will be taxable income.
The NGOs will receive the remaining amount(85%)after deducting our margin/commission. Since,only the NGOs will be able to provide the 80G Receipt to the donors for tax benefit/Excemption.
Can the NGO provide the receipt through us?

We want the Donors to make contribution using our services and still get tax excemption for the 85% of the donation amount(which goes to the NGO)

how will this be shown in our books? how to make the tax benefits for donors possible?

your help is well appreciated,
Thank you.

Amol S Joglekar

Amol S Joglekar (Expert)
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06 December 2012 What is the problem in giving 100% amount of donation receipt to donors by NGO? NGO should issue the receipt of full amount and claim for expenses of 15% paid to you. What is the issue? There are many free lancers who collect such funds for TRUSTs / NGOs. They are working fine with such arrangements. Even these free lancers collect the donations in the name of NGO / TRUSTs.

Querist : Anonymous

Querist : Anonymous (Querist)

07 December 2012 Dear Sir,

Thank you for the response.
we are aware of the method you have advised. however ,we are searching for an alternate option where we can cut down on the time in receiving our share/margin back from the NGO. we thought that if we could directly remit the amount after deduction, it would be easier for us and the NGO (in terms of transit time and delays in receiving payments from various locations). is there an alternate method to make this possible? Please advise.

Amol S Joglekar

Amol S Joglekar (Expert)
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07 December 2012 If you are sure, take advance from the TRUST. Adjust the same later on in due course of time.

Querist : Anonymous

Querist : Anonymous (Querist)

07 December 2012 Dear Sir,

Can we mimic the system, where corporates/companies make donations on behalf of their employees from the salary account, and then the charities provide the 80G receipt for the donation through the company for the employees tax benefit.

like these companies, can we make donations on behalf of the donors and provide tax benefit to the donor through us. Is this possible. how do companies do this?

Amol S Joglekar

Amol S Joglekar (Expert)
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09 December 2012 Yes, you can very well think of creating/ forming a company and then route out such transactions through the said company.

Querist : Anonymous

Querist : Anonymous (Querist)

10 December 2012 Dear Sir,

Looking back to the previous method advised. "NGO should issue the receipt for full amount and claim for expense of 15% paid to you. NGOs can give receipt for 100% donation amount to donors"
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following is the feedback we received from an NGO.

"Dear friend,
I think it would still not work since donor does not get any Tax relief unless he donates directly to an organisation approved by the Income Tax authorities for Tax exemption u/s 80G or Sec 35.

In this case if he intially remits the amount to your account it can not be treated as a Transaction between him and us, we would only be a third party in the case. And since the transaction would not be from him to us directly - eg between our Bank Accounts, we would not be permited to issue our 80G/35 receipt to his name and identity - a third party for us.

Please also note that as per current procedurtes the receipts must also bear the donor's full address and his PAN No. to be able to avail Tax rebate.

What is done in such cases is that the intermediary organisation itself is registered as a Charity u/s 12 and 80G or 35, and they receive donations and re-donate them to us - as their charitable activity."
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Sir, what is your insight on this matter?
is there a way to provide the tax rebate to donors through us, we are registered as for profit establishment.

Please advise how to proceed.

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