Over the last few years, the Income Tax Department has tightened control over donations. Tax on anonymous donations (sec. 115BBC) is one example. Ensuring compliance with modified definition of charitable purpose is another reason.
The Assessing Officers have now started asking NGOs to provide full details of all the larger donations. This may include related correspondence, remittance details, PAN, purpose of the donation, etc. Documents generated by the NGO itself are not good enough – the Department wants to see what the donor has said.
The idea is to find out whether any of these donations are anonymous in reality. This exercise also helps the AO figure out whether any of the receipts are really service payments / fees, which have been disguised as donation or grant to avoid problems under sec. 2(15).
