Non-Governmental Organizations (NGOs) or Non-Profit Organizations (NPOs) are private organizations formed to alleviate suffering, promote the interest of the underprivileged, protect environment, provide fundamental social services, or carry out community development. The motive of such organizations is to not work for profit, hence the term Not-for-Profit Organizations.

The Government sees these organizations as partners in implementing Government’s Community Development Programs and other Social initiatives, thus the termed Non-Governmental Organizations in Dubai has been coined. Such organizations receive funds from donor agencies or philanthropic institutions/individuals as well as from the Corporate discharging Corporate Social Responsibility, CSR activities and hence are liable to Financial Audit as well as file Income Tax Return.

Preparation for Filing Income Tax Return 

Before the last date for filing Income Tax Return, NGOs should note some important points about Income Tax Return. As given below:

  • Normally, NGOs are exempted from Income Tax.
  • Also, any Tax Deducted at Source (TDS) will be refunded.
  • An NGO registered under Section 80G of the Income Tax Act, 1961, is allowed to issue exemption certificates to all those entities who have donated to the NGO.
  • Such certificate of exemption that the NGO issues will entitle the donor to claim income tax exemptions from its income, subject to a limit of 50 % of such amount donated.
  • Finance Act 2017 has amended section 80G which says that deduction shall not be permitted under section 80G concerning the donation of any amount in excess of Rs. 2000/- unless such amount is not paid in cash. Earlier this limit was capped at 10,000/-
  • It is also important to note that even though a Society, Trust and Section 8 Companies are registered under the provisions of different acts, all must register under U/S 12A of the Income Tax Act to claim exemption.
  • It is essential to note that when registration is granted U/S 12A, it does not mean automatic approval U/S 80G. Section 80G applies to charitable trusts or institution only and not to religious trust or religious institutions.

Filing of Income Tax Return by NGO and the last date-in case of:

  • Every Trust, Society where its total annual revenue before exemption U/S 11 and 12 is more than the maximum amount that is not chargeable to income-tax, during the Assessment Year.
  • Income Tax Return Form: ITR 7 form is to be filed for persons including companies that are under sections 139(4A), 139 (4B), 139 (4C) or U/S 139 4(D) of the IT Act. ITR7 can be downloaded from the official website of the Income Tax Department. Follow instructions for filling out ITR-7
  • If the assessee is responsible for Audit U/S 44AB the details of such audited report by a Chartered Accountant, along with the date of furnishing it to the IT department needs to be mentioned under “Audit Information” in the ITR-7.
  • NGOs must file IT Return online with or without DSC. A trust may also file the return of income under the Electronic Verification Code. However, a trust liable to get its accounts audited under section 44AB shall furnish the return electronically under DSC.
  • A trust that is mandated to have its accounts audited as per the Income Tax Act or any other law – 30 September of the assessment year
  • A trust required to submit report in Form No. 3CEB U/S 92E – 30 November of the assessment year
  • In any other case – 31 July of the assessment year

Help in filing Income Tax Return of NGOs is provided by GCC Filings. It is one of the top audit service providers not only for Commercial Businesses but even NGOs and Section 8 Companies. It even manages accounts and generates financial statements along with the final Balance Sheet.

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