As NGOs, we receive funds in different forms—subscriptions, donations, and sometimes even anonymous contributions. But how are these treated under tax laws? A recent post from one of our PATTIC forum members raised some key questions.
Question: What if NGOs give a voucher in consideration of subscription (a monthly auto payment by members/supporters), which can be redeemed by members from the NGO’s partners like schools or stationery vendors. The NGO does not pay anything to the partners like schools and has just entered into an MoU with partners to provide free education and stationery at discount.
Answer: Suppose as a donor to your NGO, I pay Rs.100 as subscription and get a voucher of Rs.100 which means this subscription is not strictly a donation but an exchange transaction. Redeeming this voucher with NGO partners against a money obligation would tantamount to wrongly claiming 80G benefit while making such a subscription. Also read Section 80G(5) conditions which get violated because of this arrangement.
What are your thoughts? Read & Join the conversation here.
While you were reading this, did other questions come to mind?
- What about anonymous donations? To what extent are they exempt in the hands of a charitable or religious trust or institution?
- And what about corpus donations? Are they taxable in the hands of a charitable or religious trust or institution?
Find answers in our carefully curated FAQ:
Have a question regarding statutory and regulatory matters for your NGO? Simply send an email to [email protected] with your question and get insights from experts & peers.
Our best,
Team PATTIC
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