Giving is satisfying!
Additionally, all of your kindness results in additional tax savings for you.
How? On donations made to designated funds and charitable organisations, the Indian government permits you to claim income tax deductions under Section 80G.
Donating to an NGO that will qualify for Section 80G tax exemption is one of the best methods to reduce your tax liability while simultaneously doing your part to better the world. However, these must be legitimate trusts or organisations.
What is Section 80G?
In order to encourage people to engage in philanthropic endeavours, Section 80G of the Income Tax Act largely deals with contributions to NGOs and other charitable organisations. Tax exemptions are available in this area for donations made to specific organisations or funds. When submitting an income tax return, an individual may deduct money they have given to a qualified charity.
What is the eligibility?
All taxpayers (individuals and businesses) are qualified to make charitable contributions under Section 80G and claim a tax exemption, subject to any applicable government-imposed restrictions. If NRIs donate to eligible trusts or institutions, they are also eligible for Section 80G benefits.
What donations are permitted?
People who want to deduct expenses under section 80G must make sure the NGO or charity they are donating to is covered by the Act. Only contributions given to legitimate, legally recognised charities or funds are eligible for the appropriate deductions.
Additionally, after being registered under Section 12A, trusts and charities are eligible to provide the 80G certificate. Individuals may not deduct every donation they make in accordance with Section 80G. This clause does not apply to contributions made to foreign trusts or political parties and donors cannot deduct such contributions from their taxes.
Deductions under Section 80G
There may not always be a cap on the amount of deduction allowed on contributions made in accordance with section 80G. However, in other circumstances, the Section 80G deduction for donations is capped at 10% of the taxpayer's adjusted gross total income.
However, in some cases the full deduction is allowed of the amount donated whereas in some cases only 50% of the amount donated can be claimed as a deduction.
Documents required to claim deduction
The following documentation is required to support Section 80G deduction claims made by individuals.
Receipt: A properly stamped receipt must be provided by the NGO or charity that receives a donation. The name, address and PAN number of the trust, along with the amount donated and the donor's name should all be listed on this receipt.
Donors should make sure their receipt includes the trust's registration number assigned by the Income Tax Department. This registration number must be active on a certain date.
Form 58: Without Form 58, a donor's donation will not be qualified for a 100% deduction and cannot be used to offset other expenses.
Mode of payment for donations
A person can save tax, given in accordance with Section 80G. You have the option of paying for donations using cash, checks or draughts. However, a few things need to be kept in mind in this regard:
• Over Rs 2,000 in cash donations will not be eligible for the deduction.
• Food, medication, clothing, and other in-kind donations are not eligible for the deduction.
• Donations of more than Rs. 2,000 must be made in a method other than cash in order to qualify for deductions under Section 80G.
According to the regulations outlined in Section 80G, the donations will either be qualified for a deduction of 50% or 100% (with or without restriction).
How donating to Akshaya Patra benefits a taxpayer?
Akshaya Patra is registered under The Indian Trusts Act of 1882 and Section 12A of the Income Tax Act of 1961. Thus, 50% of any donation (online or offline) made as an individual or corporation to the NGO can be deducted when the income tax return is filed.
Since 2000, the Foundation has provided Government school children with midday meals as an implementing partner of the PM POSHAN Abhiyaan (formerly known as the Mid-Day Meal Programme or MDM Programme).
This financial year, ensure that every child has an access to at least one nutritious meal a day and an access to unlimited education, by donating to Akshaya Patra that supports the PM POSHAN Abhiyaan or MDM Programme. In addition, you can also donate towards the health and well-being of homeless mothers. Donate online and save tax, under Section 80G of Income-tax Act!