Do a Good Deed and Save Tax

Do a Good Deed and Save Tax

Claim Income Tax for donation under section 80G

The last quarter of this fiscal year (2019-20) is fast approaching and soon we will all be scurrying around for tax saving schemes. We often wait till the end to start our tax planning but the smart way is to look into the tax saving options early in the financial year, so there is enough time to plan.

There are several income tax saving schemes for salaried under section 80C of the Income Tax Act, which allow investors to claim up to Rs1.5 lakh from the total income.  There is also Section 80G which offers income tax exemption as incentives for donations made to charity organisations. It is applicable to everybody – individuals, companies, and firms.

What is Section 80G?

Section 80G of the Income Tax Act, allows you to claim tax benefit on donations made to charitable institutions and specific relief funds. However, not all donations are eligible for deductions under section 80G. You can gain donation tax rebate under Section 80G for donations made to those institutions or relief funds which are prescribed for tax exemption. The donations in section 80G are eligible for deductions of up to either 100% or 50%. 

What are the subsections of Section 80G?

Income tax saving options under section 80G are not just limited to donations made to charities. You can also claim tax rebate on donations made to scientific research organisations and organisations engaged in rural development. You can get 100% tax deduction under section 80GGA through these donations. 

What is the mode of payment?

Income tax deduction can only be claimed under section 80G if donations are made via cheque, draft, or cash. You can donate any amount to an NGO, but cash donations must not exceed Rs. 10,000 to claim donation tax deduction. Donations made in kind like food, clothes, medicines  are not eligible for tax exemptions under section 80G.

However, from financial year 2017-18, any donations made in cash above Rs. 2,000 are not allowed as deduction. Donations above Rs. 2,000 must be made through any other mode to qualify as a deduction under 80G.

How to claim 100 percent deduction?

Section 80G offers a 100% category under tax saving options. Some of the donations applicable for deduction up to 100% are as follows:

1.    Prime Minister’s National Relief Fund
2.    National Defence Fund by the Central Government
3.    National Foundation for Communal Harmony
4.    National Children’s Fund
5.    National Illness Assistance Fund

Donations eligible for 100% deduction subject to 10% of adjust gross total income include donations to the government or any approved local authority or institute utilized for promoting family planning. 

How to claim 50 percent deduction?

You can earn 50% tax deduction under section 80G from the following donations:

1.    Prime Minister’s Drought Relief Fund
2.    Jawaharlal Nehru Memorial Fund
3.    Rajiv Gandhi Foundation
4.    Indira Gandhi Foundation

Donations eligible for 50% deduction subject to 10% of adjusted gross total income include any other fund or institution which meet the criteria in Section 80G(5), government or any other local authority which utilize the donation for any charitable purpose other than family planning.

What are the documents required to claim tax under section 80G?

While filing your tax returns under section 80G you will need a stamped receipt from the NGO or trust with the organisation’s name, address and PAN, and your name and the amount you donated. For 100% deductions on donations, you need a Form 58. You also need the organisation’s registration number, validity dates and an 80G certificate.

Donate to an NGO

Donating to an NGO is the most noble way to save tax. It gives you an opportunity to contribute to a humanitarian cause while gaining tangible benefit for yourselves. NGOs like Oxfam India lets you donate to the cause closest to your heart, whether it is education, women empowerment, or disaster relief. You can obtain a tax rebate and also the joyous feeling of giving. When you donate to Oxfam India, you help the most marginalised men, women, and children in our society gain access to healthcare and education, and stand up for their rights, thus ending discrimination. Sign up for their regular giving programme, so you don’t have to spend a huge amount of money all together to claim your tax benefit.

Oxfam India ensures that the stories of people whose lives you have changed reach you to keep you updated on the impact you are making. It also maintains complete fund transparency which you can access through its annual reports. This will assure you that your hard earned money is not going to waste.

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