Amendment of section 80G.
40. In section 80G of the Income-tax Act,––
(I) in sub-section (2), in clause (a), sub-clauses (ii), (iiic) and (iiid) shall be omitted with effect from the 1st day of April, 2024;
(II) in sub-section (5),––
(A) with effect from the 1st day of October, 2023,––
(i) in the first proviso, for clause (iv), the following clause shall be substituted, namely:––
“(iv) in any other case, where activities of the institution or fund have––
(A) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said approval is sought;
(B) commenced and where no income or part thereof of the said institution or fund has been excluded from the total income on account of applicability of sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 or section 11 or section 12 for any previous year ending on or before the date of such application, at any time after the commencement of such activities:”;
(ii) in the second proviso,––
(a) in clause (ii),––
(1) in the opening portion, after the word, brackets and figures “clause (iii)”, the words, brackets, figures and letter “or sub-clause (B) of clause (iv)” shall be inserted;
(2) in sub-clause (b), for item (B), the following shall be substituted, namely:––
“(B) if he is not so satisfied, pass an order in writing,––
(I) in a case referred to in clause (ii) or clause (iii) of the first proviso, rejecting such application and cancelling its approval; or
(II) in a case referred to in subclause (B) of clause (iv) of the first proviso, rejecting such application,
after affording it a reasonable opportunity of being heard;”;
(b) for clause (iii), the following clause shall be substituted, namely:––
“(iii) where the application is made under sub-clause (A) of clause (iv) of the said proviso or the application is made under clause (iv) of the said proviso as it stood immediately before its amendment vide the Finance Act, 2023, pass an order in writing granting it approval provisionally for a period of three years from the assessment year from which the approval is sought,”;
(B) in the third proviso, for the words “first proviso”, the words “second proviso” shall be substituted.
Notes on Clauses:
Clause 40 seeks to amend section 80G in the Income-tax Act relating to deduction in respect of donations to certain funds, charitable institutions, etc.
Sub-section (2) of the said section, inter alia, provides the names of the funds to which any sum paid by the assessee in the previous year as donation is allowed as a deduction to an extent of fifty per cent. of the amount so donated.
It is proposed to omit sub-clauses (ii), (iiic) and (iiid) of clause (a) of the said sub-section.
This amendment will take effect from 1st April, 2024 and will, accordingly, apply in relation to the assessment year 2024-2025 and subsequent assessment years.
First proviso to sub-section (5) of the said section, inter alia, provides for the time within which institution or fund referred to in clause (vi) of the said sub-section is required to make an application to the Principal Commissioner or Commissioner for approval.
It is proposed to substitute clause (iv) of the first proviso to sub-section (5) to provide that the institution or fund, referred to in clause (vi) of the said sub-section, which is not covered by clause (i), (ii) or (iii) of the said proviso, may make an application for approval, where activities of the institution or fund have––
(A) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said approval is sought;
(B) commenced and no income or part thereof of the said institution or fund has been excluded from the total income on account of applicability of sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 or section 11 or section 12 for any previous year ending on or before the date of such application, at any time after the commencement of such activities.
Clause (ii) of the second proviso to sub-section (5) of the said section provides for the procedure of granting approval by the Principal Commissioner or Commissioner where the application has been made under clause (ii) or clause (iii) of the first proviso.
It is proposed to amend clause (ii) of the second proviso to sub-section (5) of the said section so as to provide that where the application is made under the proposed sub-clause (B) of clause (iv) of the first proviso, the Principal Commissioner or Commissioner shall follow the procedure provided under clause (ii) of the second proviso.
It is further proposed to substitute item (B) of sub-clause (b) of clause (ii) of the second proviso to sub-section (5) of the said section so as to provide that if the Principal Commissioner or Commissioner is not so satisfied, about the objects and the genuineness of its activities under item (A) of sub-clause (a) of the said clause, and compliance of the requirements under item (B) of sub-clause (a) of the said clause, pass an order in writing,––
(I) in a case referred to in clause (ii) or clause (iii) of the first proviso, rejecting such application and also cancelling its approval; or
(II) in a case referred to in the proposed sub-clause (B) of clause (iv) of the first proviso, rejecting such application.
after affording it a reasonable opportunity of being heard.
It is also proposed to amend clause (iii) of the second proviso of the said sub-section to provide that where the application is made under sub-clause (A) of clause (iv) of the first proviso or the application made under clause (iv) of the first proviso as it stood immediately before its amendment vide the Finance Act, 2023, the Principal Commissioner or Commissioner shall pass an order in writing granting approval to it provisionally for a period of three years from the assessment year from which the approval is sought, and send a copy of such order to institution or fund.
These amendments will take effect from 1st October, 2023.
Third proviso to sub-section (5) of the said section, inter alia, provides that time line during which the order under the first proviso is required to be passed by the Principal Commissioner or Commissioner.
It is proposed to amend the third proviso to sub-section (5) of the said section so as substitute the reference of “first proviso” with “second proviso”.
This amendment will take effect from 1st April, 2023.
