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Tax Deductible Donations

The Income Tax Act (1961) offers tax benefits of donating to charity to anyone who makes donations to charitable organisations under Section 80 (G). To claim this tax rebate, it needs to be cited at the time of filing annual Income Tax Return. Up to 100% tax exemption can be availed for donations to registered NGOs, and this provides immediate gratification to donors, and also serves as a government incentive to NGOs to help them in fundraising. Not all philanthropic donations, no matter how virtuously made, offer a tax rebate. Here is what you should know about tax rebates, as well as the provision for 100% tax rebate.

1. 100% Income tax exemption in donation deduction
For a donation to an NGO or reputed organisation that offers 100% tax exemption, your taxable income becomes (Total Income) minus (Donated Amount), generating a net income, on which the income tax is now calculated, based on the prevailing tax rate.

However, some donations only permit 50% deduction on the donation made, whereas donations under Sections 80GGA or 35AC provide 100% entire amount donated. These apply to sums up to 10% of your taxable income, after deductions, capital gains, income exempt from tax, and Section 10 deductions.

2. Types of donations
A Rs. 10,000 limit has been established for claiming a tax deduction for 35 AC or 80G certificates. Within days of your contribution, you will receive a tax certificate that can be attached to your income tax application form. Only cheque, cash, or online donations are considered valid for tax exemption. Any other forms of donations, including food, medicine, etc, are not applicable for tax purposes.

3. Donations with 100% deduction
Here are ten important types of donation which permit 100% deduction:

1. National Defence Fund set up by the Central Government
2. Prime Minister’s National Relief Fund
3. Fund set up by a State Government for the medical relief of the poor
4. National Illness Assistance Fund
5. National Blood Transfusion Council or to any State Blood Transfusion Council
6. National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
7. National Sports Fund, National Cultural Fund, and National Children’s Fund
8. Fund for Technology Development and Application
9. Swachh Bharat Kosh (applicable from FY 2014-15)
10. Clean Ganga Fund (applicable from FY 2014-15)

4. What are the tax benefits of donating online?
In today’s times, donating online is one of the most efficient ways of making a difference. Transactions are executed instantly and securely and directly reach the NGO. Your credit card/Net banking provider also will instantly send you an email and create an easily accessible record of the transaction. Credit card transactions can be disputed in the case of discrepancies. This ‘paper trail’ is valid proof in case of an audit,

Donations to political parties (for miscellaneous campaign expenses etc), foreign trusts, and organisations not registered with the Income Tax Department via u/s. 12A & U/s. 80G are not applicable for income tax rebate. However, it is not only donation tax return that should drive donations. Every rupee and selfless act are of value when helping the poor and needy. The unparalleled reach and numerous social change programs established by globally reputed Bal Raksha Bharat ensure that contributions from donors create great value. Bal Raksha Bharat is known for transparency in donation spending, and is supported by tens of thousands of donors. Your hard-earned money can go a long way to facilitate a world of happiness and purpose for today’s disadvantaged children.

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