India holds a old-rich tradition and belief for Daan, Seva & Devotion and. Donating wealth and contributing for good causes is a practice that is done to earn solemn required for good deeds.
Indians have been donating in either through charitable organizations, NGOs, ashrams, temples, causes, etc. But, not many know that donations also helps you in tax savings. This is where Section 80G of IT Act comes into the picture. Take a read.
Contributions made to specific charitable institutions and relief funds can easily be claimed as 80G Deduction as per the income tax Act. However, every sort of donation is not eligible for deduction.
Only such donations that have been made to assigned funds get qualified to claim a deduction. Also, it can be claimed by any taxpayer such as - company, individual, firm, or any other person.
Ensure donation is made through draft, cash, or cheque. Donating in cash should not exceed Rs. 10,000. The contributions made in the form of material, food, medicines, clothes, etc., are not eligible for deduction under Sec 80G.
To claim deduction, you would have to mention certain details while filing your Income Tax Return, like:
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Adjusted Gross Total Income for 80G is the sum total of your income under all heads, but less than the amount mentioned below:
A few tax benefits do have some restrictions. While certain donations can have up to a 100% deduction, there are a few with limits. Generally, Section 80G categorizes donations under two different categories:
You can claim either 50% or 100% of the donation amount without any other limitation. The National Defence Fund and The Prime Minister's National Relief Fund are a few examples of funds set up by the central government on which 'without any maximum limit' and 100% deduction clauses are applicable. You can claim deduction on 100% of the amount donated.
Some of the funds allow you to claim only 50% of the amount donated.
At the institutions where the 'with maximum limit' clause is applicable, you can claim either 100% or 50%. The upper limit is 10% of the “adjusted gross total income”.
To calculate deduction amount under this section, follow these steps:
Now, use this formula to find out the deductible amount:
Moving forward, only a certain number of donations are eligible for deduction under this section. Let's find out more about the same:
Keep in mind that if a deduction has been approved under section 80GGA, these expenses will not be deductible under any other section of the Income Tax Act.
In the end, if you have been making donations for good causes and the welfare of the society, make sure that your contribution doesn’t go unnoticed. Get to know more about your donation category and claim deductions while filing ITR.
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