Donating to charity is a noble gesture and also paramount to a nation’s sustainable development. It enables those with limited opportunities to lead better lives and transcend socioeconomic boundaries. Donations for resources like mid-day meals, clean water, shelter, education and medical care also actualise the donor’s belief in an inclusive society where everyone enjoys equal rights and productively contributes to their nation’s growth.
Thus, countries worldwide promote such constructive charitable contributions by allowing tax deductions on them. In India, Section 80G of the Income Tax Act, 1961 permits taxpayers to claim a deduction on their donation to registered non-profit organisations and certain relief funds. This clause has noteworthy benefits that eventually fan out from the taxpayer to the entire nation.
Benefits of Section 80G
Giving = Saving
Giving to those in need becomes more rewarding with provisions like Section 80G. It not only uplifts the donor emotionally but also returns 50-100% of the amount contributed to eligible charitable entities. Contributions made through cheque, demand draft and cash (below ₹2,000) are eligible for such deductions. However, one must consult a financial expert to get the most out of the clause.
Support social causes
The World Bank estimates in 2023 show that 700 million people around the world live in extreme poverty today. They live bereft of basic amenities such as food and water, surviving on less than $2.15 a day. The call for help gets louder in developing countries. Clauses such as Section 80G motivate those financially sound to fuel the efforts of providing the socioeconomically challenged with hope, opportunities and a better lifestyle.
At The Akshaya Patra Foundation – a 23-year-old NGO in India registered with the IT Act, 1961 – a contribution of ₹1,500 (18 USD) can feed a child in a government school for an entire year. It nourishes the child with the nutrition they deserve and incentivises their parents to send them to school regularly. At school, these children are free to explore their potential and shine in the areas of their interest. Some are already excelling in sports, playing at interschool, district and state levels. Many others are top scorers in academics, forging their bright futures in agriculture, medicine, civil services and more.
Currently, Akshaya Patra is feeding over 2.2 million such children across 15 states and 2 union territories. Generous contributions have the potential to keep the children’s spirits ablaze without any worries about socioeconomic barriers. The NGO also provides tax exemption certificates on online donations, which you can attach as proof during the tax claim process.
Encourage philanthropy
The development of a nation will never be complete unless all its communities thrive. Section 80G encourages philanthropy that reinforces the existing government initiatives, improving their efficiency and impact.
Public participation can help enforce fundamental rights to food, shelter, education, security, employment, medical care and so on more effectively. Government initiatives like the PM POSHAN Abhiyaan, National Skill Development Fund, Prime Minister’s National Relief Fund and welfare programmes for child rights, health and education will fare better with funds from individual and corporate donors across the world. Today, almost every NGO has facilitated a hassle-free online donation process that allows one to change lives with only a few clicks!
In closing
Tax benefits under Section 80G vary based on the type of charitable organisation and the percentage of the donation eligible for deduction. Furthermore, only taxpayers who have opted for the old tax regime can claim Section 80G deductions.
Thus, it is advisable to check the latest tax regulations and file your claims accordingly. Thereafter, you will have a financial incentive along with emotional benefits for contributing to charity and making this world a better place for everyone!