Budget 2020: No more Anonymous Donations, Charitable Institutions should Disclose details of Donees in Tax Return

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Anonymous Donations - Sham Transaction - Donation - ITAT - Taxscan

In a Budget 2020 presented today by the Union Finance Minister Nirmala Sitharaman has proposed to restrict Anonymous Donations. The Government has proposed Charitable Institutions should disclose details of Donees in Tax Return.

Deduction under sub-section (5) of Section 80G of the Income Tax Act with respect to donations to any institution for a charitable purpose is proposed to be available only on disclosure of information relating to the donee. It is proposed to pre-fill the donee’s information in the taxpayer’s return on the basis of information of donations furnished by the donee.

In order to claim the tax exemption, charity institutions have to be registered with the Income Tax Department. It is proposed to make the registration completely electronic under a unique registration number (URN) to be issued to all new and existing charity institutions.

It is proposed that the assessee’s claim for a deduction in respect of any anonymous donations made in the return of income for any assessment year filed by him, shall be allowed on the basis of information relating to said donation furnished by the institution or fund to the income-tax authority or the person authorised by such authority, subject to verification in accordance with the risk management strategy formulated by the Board from time to time.

Explanation 2A to Section 80G is proposed to be inserted to declare the same which shall take effect from 1st June 2020.

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