Manager - Finance & Accounts
58379 Points
Joined June 2010
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.