Payment of cash beyond Rs. 20,000

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This query is : Resolved

Satya Pratap (Querist)

15 July 2009 An NGO is not liable to Income Tax provided it complies under the terms of section 11, 12, 12A, 12AA and 13.

However, is it anyway oblized to follow the intent of section 40A and Rule 6DD.

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)

15 July 2009 Yes, it is required to follow the above section and
rules.

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)

15 July 2009 Yes, it is required to follow the above section and
rules.

Ratan Sharma

Ratan Sharma (Expert)

15 July 2009 Hi,
Even if sec. 40A apply to NGO , there will be no tax implications. because even after adding such expenses the net income will be exempt from tax.

Taranjit Singh

Taranjit Singh (Expert)

15 July 2009 Some people believe that NGOs are automatically exempt from income-tax. This is not
true. You need to apply for income tax exemption. After that you need to follow certain
conditions in order to remain exempt. Additionally, there are other requirements which
affect an NGO’s working.
Broadly there are three types of registration. Basic registration means that the NGO will
not have to pay income tax2 on its surplus3. This is the most important registration and
every NGO should have it.
Next comes registration for TDS4. NGOs have to deduct income tax when they make
payments to some people. After deducting tax, this is deposited with the Government.
Third is the approval for donors. These approvals mean that your donors will have to pay
less income tax whenever they donate money to you.

Taranjit Singh

Taranjit Singh (Expert)

15 July 2009 Under Income Tax Act4, loans of Rs.20,000 or more have to be taken or repaid by
crossed account payee cheque or draft. Applies for NGOs also.

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