Description

BSE clarifies the eligibility of donations made through the Social Stock Exchange (SSE) for tax deductions under Section 80G of the Income-tax Act, 1961.

Summary

BSE has issued a clarification regarding the eligibility of donations made through the Social Stock Exchange (SSE) for tax deductions under Section 80G of the Income-tax Act, 1961. This circular provides guidance to market participants, Not-for-Profit Organizations (NPOs), and donors on the tax treatment of contributions made through the SSE platform.

Key Points

  • Clarifies the applicability of Section 80G tax deductions for donations made through the Social Stock Exchange
  • Provides guidance to NPOs registered on the SSE platform regarding donor tax benefits
  • Aims to promote transparency and encourage participation in the Social Stock Exchange ecosystem
  • Addresses queries from market participants regarding tax implications of SSE donations

Regulatory Changes

This circular provides clarification on existing tax provisions rather than introducing new regulatory changes. It confirms how Section 80G of the Income-tax Act, 1961 applies to donations made through the SSE platform.

Compliance Requirements

  • NPOs registered on the SSE must ensure compliance with Section 80G registration requirements to enable donors to claim tax deductions
  • Donors should verify the Section 80G eligibility of NPOs before making donations if seeking tax benefits
  • Proper documentation and receipts must be maintained for claiming tax deductions under Section 80G
  • NPOs should clearly communicate their Section 80G registration status to potential donors

Important Dates

  • Circular Issue Date: December 16, 2025
  • Effective Date: As per the circular

Impact Assessment

Market Impact: This clarification is expected to enhance the attractiveness of the Social Stock Exchange platform by providing clarity on tax benefits available to donors. It may encourage increased participation from both NPOs and donors in the SSE ecosystem.

Compliance Impact: NPOs on the SSE platform need to ensure they maintain valid Section 80G registration to offer tax benefits to donors. This may require additional compliance efforts for organizations not currently registered.

Stakeholder Impact: Positive for donors seeking tax-efficient ways to contribute to social causes, and for NPOs looking to attract funding through the SSE platform with the added incentive of tax deductibility.

Impact Justification

Provides clarification on tax deduction eligibility for SSE donations, affecting NPOs and donors participating in the Social Stock Exchange platform