According to the law of karma, whatever we put into the universe comes back to us. It applies even to the donations made towards charity. The act of kindness towards charitable donations comes back in the form of tax savings. Tax deductions by the government encourage more people to donate to worthy causes. Learn these important things before making a donation and save tax.
- All the charitable money donations are eligible for 50% to 100% deductions on the taxable income.
- The percentage of the deduction depends on the charitable institution to which the donation is made.
- Donations from the taxable or exempted income are to be made in the form of cheque or cash.
- A salaried person contributing towards the charitable fund is eligible for a deduction under Section 80G, provided the receipt bears the name of the donor and the company.
- Do not miss to take a receipt for the donation made for any social cause. The receipt should have your name, the trust’s name, donated amount, and the registration number of the trust as per Section 80G.
- Donations to any of the following are eligible for 100% tax deduction: Donations to Zila Saksharta Samitis; National Defence Fund; Approved educational institution or university of national eminence; CM’s Earthquake Relief Fund; PM’s Armenia Earthquake Relief Fund; PM’s National Relief Fund; The Indian Naval Benevolent Fund or Army Central Welfare Fund or Air Force Central Welfare Fund; State Blood Transfusion Council or National Blood Transfusion Council; National Foundation for Communal Harmony; The Africa (Public Contribution – India) Fund.
- Donations to following funds would be eligible for 50% tax deductions: National Child’s Fund; The Rajiv Gandhi Foundation; Indira Gandhi Memorial Trust; Jawaharlal Nehru Memorial Fund; Prime Minister’s Drought Relief Fund.
- The subsections under Section 80G include Section 80GGA and Section 80GGC. Under Section 80GGA, the donation made by taxpayers, without business income, to organizations in rural development or scientific research, is applicable for 100% tax deduction. Under Section 80GGC, 100% tax deduction is allowed for a contribution to a registered political party.
- Contributions made towards pre-approved projects under Section 35AC are eligible for 100% deduction.
- Donations made to NGOs involved in afforestation and natural resource conservation fall under Section 35CCB, which are eligible for 100% deduction.
In conclusion, ensure that the charitable institution is a registered organization before making a donation. Get the receipt after donating, to make the required tax claims and lower the taxable income. Continue to contribute your bit to the society and be the reason for spreading smiles, while saving tax.
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