Process of Deduction on Donations Under Section 80G

14/07/24

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Donation exemption allows a taxpayer to arrive at a lower level of assessable income. This is made possible by section 80G of the Income Tax Act, which enables you to donate and save tax. This Section of the Income Tax Act demonstrates how the Government of India has successfully leveraged tax mechanisms to encourage tax compliance, incentivised charity and donation to NGO tax exemption, and provided citizens with a pathway to reduce their net taxable income.

What is Section 80G?

Section 80G relates to those taxpayers who donate to charities and non-profit organisations. It facilitates their bringing down their tax liability. This can be either 50 per cent or one hundred per cent of the donation depending on the type of charitable organisation and their respective terms, in the context of tax policy. 

Who can benefit from Section 80G of the Income Tax Act of 1961?

The stated deductions can be claimed by individuals Hindu Undivided Families (HUFs), and companies, who all can donate and save tax. The deductions work in such a way that they bring down the donor’s taxable income; in the process, they also can reduce the tax slab under which someone’s income falls, another benefit. 

Steps to claim deduction

For those curious about how to save tax in India using donations, here is a simple ready reckoner:

1. Verify eligibility: Follow if 80G applies to your donation, and if you are eligible for donation to NGO tax exemption
2. Get a receipt: Make sure that you are issued with a written acknowledgement for the amount that you have donated. This should be your name, contact details and details of the charity such as the name, address and registration number.
3. Check the deduction limits: Be aware if it is a 50 per cent or 100 per cent tax credit.
4. Calculate your deduction: Be able to work out the figure that will be allowed from the total tax amount from the taxable income.
5. Report in your ITR filing: This deduction should be declared during the computation of one’s income tax returns. Input relevant information regarding TIN/PAN, and the name of the Managing Trustee as per the 80G section of the form.
6. Keep documentation: Keep any receipts and any other relevant documents. They may be necessary for tax purposes and tax authentication.  

Tax savings through donations to institutions like Bal Raksha Bharat

Donating to renowned child rights NGO Bal Raksha Bharat not only supports child welfare but also offers tax benefits. Bal Raksha Bharat is eligible under Section 80G of the Income Tax Act. When you donate to Bal Raksha Bharat, you can deduct 50% of your donation from your taxable income. This deduction is, however, limited to 10% of your adjusted gross total income. Adjusted gross total income refers to your total income minus any exempt income and other specific deductions under Chapter VIA of the Income Tax Act. This is crucial information for those exploring how to save tax in India.

To claim a deduction under Section 80G, make donations via cheque, draft, or online. Cash donations qualify only up to Rs. 2,000. For larger amounts, use cheque or online methods.

Bal Raksha Bharat complies with the necessary conditions of Section 80G. The NGO files a Statement of Donation Received (Form No.10BD) and issues a Certificate to Donors (Form No.10BE) annually by May 31.

Donations to Bal Raksha Bharat reduce your tax liability and support vital child protection services. Always ensure you document your donations and consult a tax professional for advice specific to your situation.

Donating to institutions like Bal Raksha Bharat not only furthers vital social causes but also yields economic perks, notably tax reductions. At the same time, it is highly prudent to engage a tax professional to navigate how these benefits align with your particular financial scenario. Working with a tax professional enables you to have a comprehensive understanding of the tax impact of your donations vis-à-vis your larger financial portfolio, your various investments, and other aspects. While donating to an NGO is important, it is important to understand that it is one step as part of a larger, holistic strategy of tax and investment.

At the same time, you must be guided by a higher sense of purpose. Each donation not only aids in funding essential services but also in sculpting a more equitable society. Embrace the spirit of giving and enjoy the dual rewards of helping others and tax savings

BRB Admin