Donate to Save Income Tax

17/12/18

Others

Income tax exemption

Do a good dead today by donating towards the cause you believe in and get income tax exemption for it. As an immediate gratification to donors, under Section 80G of the Income Tax Act, 1961, donors can receive tax rebates while filing the annual Income Tax Return for donations to charitable organisations.

An important thing to note here is that a maximum of Rs. 10,000 limit has been set for claiming this tax deduction with an 80G certificate. A donor receives this 80G certificate within days of contribution. To claim these income tax exemption donations a person needs to donate to an NGO only in cheque, cash, or make an online donation. Donations made in kind such as food material, clothes, medicines etc do not qualify for the deduction.

If you support an NGO that offers 100% tax exemption and for example you donated a sum of 2000 rupees then your taxable income becomes total amount minus the amount that you have donated. Your net income is now revised, and your income tax will now be calculated on this amount, based on prevailing tax rates. Certain donations (under section 80G of the Income Tax Act) only give you 50% deduction on the donation made, while sections 80GGA or 35AC provide a deduction for the entire amount donated. These deductions are available for sums up to 10% of your taxable income. However, it must be noted that any donations that are made to political parties (for miscellaneous campaign expenses etc), foreign trusts, and organisations not registered with the Income Tax Department via u/s. 12A and u/s 80G do not qualify for tax rebate.

There are cases when an NRI donates to a charitable organization in India. In such case the Indian government officially recognises such contributions from a non-resident Indians, and citizens with Indian passport can receive 100% tax exemption under section 35 AC or 80 GGA of the Income Tax Act. For the claim, an NRI simply needs to mention their Indian PAN Card Number when they donate online in the prescribed form to claim tax benefits.

The next time you support an NGO by donating to it you simply have give an advance notice to your office accounts team as per tax season schedule about the details of investment and other income tax-related savings in advance. Donations and any other tax saving measures cannot be restricted by an Indian company and all organisations across India are legally permitted to offer 100% tax exemption in Form 16s. This will ensure prevent any additional deduction for the donor such as Tax Deducted at Source (TDS).

You can donate to a globally reputed child rights organizations like Bal Raksha Bharat (Save the Children, India) and get income tax exemption along with the satisfaction of helping India’s marginalised children.

Gaurav Sharma

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