With an intention of encouraging tax-payers towards charity and donations, the government of India came up with Section 80G of Income Tax Act. Under this section, a taxpayer can claim donation tax deductions, if they donate to a charitable trust, institution or fund that is certified with an 80G certificate.
However, the question here is, how much amount under Section 80G will be deducted by donating? Before focusing on that, let us understand some major conditions under which Fund or Ngo tax exemption can be claimed!
The conditions are:
- Donations should be made via taxable income only.
- In kind donations (non monetary donations like food, clothes and so on) and donations to foreign trusts or political parties are not acceptable for tax deductions under section 80G.
- There is a cash donation limit (as per income tax) of Rs 2000, hence, any amount above that given in cash is not acceptable for tax exemption.
- Donations above Rs 2000 via digital mode, cheque or DD are acceptable for deductions.
Depending on the amount of money donated and the type of trust or fund, the donor can claim either 50% or 100% tax exemption (with or without qualifying limit).
These deductions are broadly classified into four categories (under section 80G)-
- 100% donation deductions (without qualifying limit)
Donations to funds and charitable organisations like the Prime Minister’s National Relief fund, The National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Mental Disabilities, and so on fall under the category of 100% tax exemption.
- 50% donation deductions (without qualifying limit)
Donations to charities and funds like Jawaharlal Nehru Memorial Fund, Prime Minister’s Drought Relief Fund, Rajiv Gandhi Foundation and so on fall under the category of 50% tax exemption.
- 100% donation deductions (with qualifying limit)
Donations done under this category will provide the donor with 100% tax exemption, however, they are subjected to a maximum of 10% gross adjusted income.
This gross adjusted income can be calculated by subtracting gross total income(GTI) with long term capital gain(LTCG) , short term capital gain(STCG) under section 111A, and all deductions under section 80C to 80U except 80G.
To be an eligible donor under this category, you can donate to-
- government or any approved local authority, institution or association which utilises the amount for promoting family planning,
- the Indian Olympic Association or to any other association notified by the Central Government for the purpose of development of infrastructure for sports and games or for the sponsorship of sports and games.
- 50% donation deductions (with qualifying limit)
Donations done under this category are provided with 50% tax deduction, however, they are subjected to a maximum of 10% gross adjusted income.
To be an eligible donor under this category, you can donate to-
- Government or any approved local authority, institution or association which utilises the amount for any charity purpose other than promoting family planning
- Any corporation (under section10(26BB)) promoting interests of the members of a minor community, and so on
Employee claiming deduction in Form 16 under Section 80G
The claiming of employee’s tax deductions in Form 16 has to be done by the employer provided the donation deduction should not fall under the qualifying limit category.
If they fall under the qualifying limit category then the deductions can be only claimed during the filing of income tax returns.
Documents required for tax exemption under section 80G are-
- Stamped receipt of donation issued by notified charitable organisation or trust with details like name of the trust and the donor, PAN number and registration number of trust, and the amount donated.
- If a donor is claiming 100% deduction, then Form 58 with details like project cost for which donation is received, amount authorised under the project and the actual amount collected is needed.
Tax deduction under section 80G at Narayan Seva Sansthan
If you are opting to donate to a non-governmental organisation that can benefit you with tax deductions under section 80G, then you can consider donating to Narayan Seva Sansthan.
Narayan Seva Sansthan is one of the top NGOs in India that focus on uplifting divyangs and other weaker sections of the society by helping and empowering them. For this purpose, they accept funds from individuals, businesses, or other institutions.
The Sansthan is registered as charitable trust under Section 12A of Income tax Act and is certified under Section 80G which means as a donor, one is subjected to tax deduction of upto 50% if they donate here.
To know more about the Sansthan and their donations, you can click here!
