These entities will now need to provide additional disclosures, including the name, address, and permanent account numbers of donors who contribute more than Rs 2 lakh in a single day. The objective of this provision is to enhance transparency and accountability.
In addition to the donor information, these trusts will also be required to submit an undertaking affirming that the activities carried out by them are of a charitable, religious, or religious-cum-charitable nature. The Central Board of Direct Taxes has revised the format of this undertaking in accordance with the latest regulations, which will be effective from October 1.
The government recently introduced changes to the registration framework for charitable organisations, specifically for claiming tax exemption or obtaining an 80G certificate under the Income Tax Act. As per the latest rules, newly established trusts or institutions must apply for provisional registration at least one month prior to the start of the financial year for which registration is sought.
In April, the Income Tax Department had issued notices to approximately 8,000 taxpayers who had made significant donations to charitable trusts, suspecting potential tax evasion. Data analytics revealed that these taxpayers were making donations that appeared disproportionate to their income and expenditure. The notices were sent to a range of individuals, including salaried employees, self-employed individuals, and companies. The Income Tax Department is also investigating tax professionals who facilitated these transactions.
Furthermore, the department is actively monitoring charitable trusts suspected of issuing fake bills to taxpayers. Although no action has been taken against them thus far, they risk losing their tax exemption status if any wrongdoing is established.Budget data indicates that in the fiscal year 2021-2022, companies claimed a tax exemption of ₹1,430 crore under Section 80G. For individuals and Hindu Undivided Families (HUFs), the revenue foregone on Section 80G donations amounted to ₹1,729 crore in the same fiscal year, representing an increase from ₹1,541 crore in the previous year.