Can an Indian NGO give a donation to another NGO

Tax queries 310 views 2 replies

Can an Indian NGO give a donation to another NGO, if yes then what are the tax implications for both?

Replies (2)

Hey Sridip! Yes, an Indian NGO can donate to another NGO, but there are some important tax implications and conditions for both sides. Here's a breakdown:


1. Can an NGO donate to another NGO?

Yes, an NGO registered as a charitable trust or society can give donations to another NGO.


2. Tax implications for the donor NGO:

  • The donor NGO must ensure that the recipient NGO is also a registered charitable organization (preferably with 12A and 80G registration).

  • Donations made by the donor NGO should be for charitable purposes aligned with its own objectives.

  • The donor NGO can claim the donation as an expenditure (if applicable) under the Income Tax Act, only if it is carrying out business and the donation qualifies as a business expenditure.

  • For pure charitable trusts, donations given are generally capital outlay or application of funds and may not be deductible from income.


3. Tax implications for the recipient NGO:

  • If the recipient NGO is registered under Section 12A, the donation amount will be exempt from income tax.

  • If the recipient NGO has 80G registration, the donor (individual/company) can claim deduction on the donation made.

  • The recipient NGO should issue a proper donation receipt mentioning their 80G registration number to enable donors to claim deductions.


4. Other considerations:

  • If the donor NGO is registered under Section 8 Company or any other form, the rules for donations may vary accordingly.

  • Both NGOs should maintain proper books of accounts and documentation for audit and compliance.

  • If the donor NGO is a non-profit company, donations to another NGO are usually considered application of funds and not business expenditure.


Summary:

  • Yes, Indian NGOs can donate to other NGOs.

  • Donor NGO's tax benefit depends on its nature (business or charitable).

  • Recipient NGO can claim exemption under 12A and donors can get deductions if 80G is applicable.

  • Proper documentation and compliance is a must.


Hey Sridip! Yes, an Indian NGO can donate to another NGO, but there are some important tax implications and conditions for both sides. Here's a breakdown:


1. Can an NGO donate to another NGO?

Yes, an NGO registered as a charitable trust or society can give donations to another NGO.


2. Tax implications for the donor NGO:

  • The donor NGO must ensure that the recipient NGO is also a registered charitable organization (preferably with 12A and 80G registration).

  • Donations made by the donor NGO should be for charitable purposes aligned with its own objectives.

  • The donor NGO can claim the donation as an expenditure (if applicable) under the Income Tax Act, only if it is carrying out business and the donation qualifies as a business expenditure.

  • For pure charitable trusts, donations given are generally capital outlay or application of funds and may not be deductible from income.


3. Tax implications for the recipient NGO:

  • If the recipient NGO is registered under Section 12A, the donation amount will be exempt from income tax.

  • If the recipient NGO has 80G registration, the donor (individual/company) can claim deduction on the donation made.

  • The recipient NGO should issue a proper donation receipt mentioning their 80G registration number to enable donors to claim deductions.


4. Other considerations:

  • If the donor NGO is registered under Section 8 Company or any other form, the rules for donations may vary accordingly.

  • Both NGOs should maintain proper books of accounts and documentation for audit and compliance.

  • If the donor NGO is a non-profit company, donations to another NGO are usually considered application of funds and not business expenditure.


Summary:

  • Yes, Indian NGOs can donate to other NGOs.

  • Donor NGO's tax benefit depends on its nature (business or charitable).

  • Recipient NGO can claim exemption under 12A and donors can get deductions if 80G is applicable.

  • Proper documentation and compliance is a must.



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