We received a cash donation of more than Rs20000 from a donor who is fully known to us. Are we allowed to accept this amount in cash? Should this donation be reported in Form 10BD even though it’s in cash? Would really appreciate clarity on what’s allowed and what’s best practice in this case.
Thanks for the query. Cash donation of Rs.20k can be received by an NPO. Only one caveat that cash donation from a person in a particular day should not exceed Rs.2 lakhs as per section 269ST of Income Tax Act since there is equal amount of penalty for violation.
Cash donation will be reported in Form 10BD since you have donor details as mentioned. The mode of receipt will be Cash. Please note that the donor will not be able to claim 80G benefit for this donation of 20k.
Hope it clarifies.
CS Sharad Bhargava
As per my understanding cash donations (cumulative) in excess of Rs 2,00,000 from a single person for the whole year will attract Section 269ST. This is the intent of the legislature and donation will be considered as a single event distributed through out the year.
Section 269ST prohibits a person to receive an amount of Rs.2 lakh and above in cash:
a. In aggregate from a person in a day, or
b. In a single transaction, or
c. in respect of transactions relating to one event or occasion from a person.
It is per transaction or occasion and not for entire year.
Penalty under section 271DA is 100%.
CS Sharad Bhargava
Most humbly it is submitted that this is not the intent of the Legislature and in Form 10 BD we have to show donations under single PAN and it is not day wise. All cash donations will need to be consolidated and shown under a single PAN hence to extrapolate that we can accept Rs 1,99,999 from a single person for all the 365 days in the year is something which no Court of Law will interpret and it will just be treated as a way to circumvent law and liable to penal consequences.
Thanks. In 10BD, cash donation can be consolidated and reported even if it is more than Rs. 2 lakhs in that FY. However, the provision of Section 269ST will have to be adhered to per transaction per day. Hope it clarifies.
CS Sharad Bhargava
Respected sir, i agree to your interpretation going by the exact wordings of Section 269T, however donation can be considered as a single event and the benefit may not be interpreted on day wise basis. I would request you to kindly share any case law relating to above so that we can advise accordingly and not be subject to any adverse interpretation by the ITD. Thanx
We are not aware of case law but shall certainly share as and when we take note of the same.
You may call me on 9828020213 to further discuss.
CS Sharad Bhargava