A voluntary help either in terms of money or kindness towards the needy people is known as charity. It not only makes you feel happy from within but you can also donate and save tax.
Today, there are various Non-Governmental Organizations (NGOs) and other non-profit bodies that collectively work on conducting charitable activities that help them raise funds or non-monetary charity for the people in need. Such institutions have forth their best efforts that further play a significant role in promoting the various economic development and social welfare objectives that the Indian Government have initiated. The outreach and localized approach that the NGOs and other non-profit entities have allowed the identification of the needy and ensuring that a supporting hand is provided to them. This is one of the key reasons why the Government of India offers tax incentives and exemptions to NGOs and charitable organizations with Section 80G exemptions being the most significant one. As per the Income Tax Act, 1961, individuals can claim an exemption under 80G against their charitable contributions. To enjoy tax benefits on donations, it is important to learn about exemptions allowed under 80G.
What is Tax Exemption on Donation?
The reduction or removal of a liability to make a mandatory payment that is otherwise imposed by the ruling power on a property, individual, income, and so on is known as tax exemption. Having a tax-exempt status may also provide relief from other taxes, offer reduced rates, or tax only on a portion of certain items. Exemption of tax to charitable trusts, NGOs from property and income taxes, veterans, cross-border scenarios, and so on are some of the examples of tax exemption. An important thing that organizations need to keep in mind is that the registrations are granted under Section 12A of the Income Tax Act. However, that doesn’t give direct approval for deductions under Section 80G. This is because; Section 80G tax benefits on donation apply only to charitable trusts, NGOs, and similar institutions. It doesn’t apply to religious trusts or institutions. Besides, an individual is not allowed to avail of tax exemption on their donations if he or she has contributed to foreign charities and political parties.
Contributions made to Indian charities qualify for income tax exemption under Section 80G of the Income Tax Act of 1961 is a little different as it provides tax exemption to charity donors as well. Donation to NGO under 80G offers deduction while calculating the total income of the donor. The recipient of the charity donation gives a receipt of donation to the donor based on which he or she can avail of tax exemption under 80G and gets the entitled deduction provided the NGO or the charitable trust is approved under Section 80G. In addition to this, tax exemption on charity is applicable provided the charity organization is established in India and is operating for charitable purposes in the country.
Tax exemption is the financial exclusion that lowers the taxable income. Tax exemption is therefore a mandatory exemption to a general rule. Tax exemptions are given to boost certain economic activities such as the activities of the Charity Organization
80G is a certificate that exempts you from paying taxes if you have made donations to NGOs, charitable trusts that are registered to offer you exemptions from taxes. Donations to Narayan Seva Sansthan are exempt from 50% tax under section 80G of the Income Tax Act. The tax benefit is valid only in India.
Making donations under section 80G can help you with tax deduction benefits. The exemption is calculated by reducing the donated amount from your taxable salary. For instance, if your taxable income per year is Rs 200,000 and you make a donation of Rs 5,000 then your net taxable income will become Rs 197,500. Your tax will now be calculated on this new amount basis the prevailing tax rates. As per the revised tax exemption act, effective April 1, 2017, donations to Narayan Seva Sansthan will be eligible for a 50% tax exemption under Section 80G of Income Tax Act.
We generate the tax certificate within 8 days from the date of the contribution made through online donations. Including the courier process, it takes 10 days for the exemption certificate to reach you. If you contribute offline it takes 15 to 20 days.
A minimum of Rs 500 needs to be donated to avail tax exemption under IT sec 80 G for Online Donations.
Soft Copy Receipt of the donation is made available instantly. But, Hard Copy of your tax receipts can be provided within 10 days.
Cash donations above Rs.2, 000 are not applicable for 80G certificates.
Non-Governmental Organisations (NGOs) and charitable trusts in India are subjected to tax exemptions under Section 80G of the Income Tax Act of 1961. However, for the tax exemption, the charitable trust must be established in India and should operating for charitable purposes in the country.
If you wish to donate the amount in cash, the limit for donation under 80G is Rs. 2000/-. If the donation amount exceeds Rs. 2000/-, you have to donate in any mode other than cash to qualify for the donation deduction under 80G.
You can make donations to NGO under 80G to claim tax incentives. There are various donations that are specified under Section 80G. They can be eligible for tax deduction of up to 100% or 50% with or without restrictions, provided they meet all the rules stated under Section 80G.
Availing tax benefits on donation is one of the best advantages of donating money to an NGO. You can easily claim tax deductions provided the NGO is eligible under Section 80G of the Income Tax Act’1961. Other than tax benefits on donation, helping the needy also makes you feel happy and content.
For 100% tax deductible donations, there are categories and sub-categories like deductions without any limit, deductions with limits, and so on, under which you have to donate. An important thing that you need to keep in mind is that if your donation falls under 100% deduction, having Form 58 is a must.
For tax exemption donations under Section 80G, amount in cash within the limit of Rs. 2000/- is eligible. However, for amount exceeding Rs. 2000/-, payments in any mode other than cash are eligible for tax deductions. Contributions like food, medicines, and so on are not eligible for tax exemption donations under 80G.
Tax exemption is the removal or reduction of a liability from making a mandatory payment that is imposed by the ruling power on a property, income, and so on. Tax exemptions on charity can availed when you make a donation to a charitable trust or NGO, provided the stated rules are met.
Tax exemption under 80G is applicable to only to NGOs, charitable trusts, and similar institutions. The deductions are not applicable to religious trusts and other such establishments. The tax exemption under 80G is unique as it provides tax deductions to the ones making the donation as well.
Depending on the category of donation, the maximum limit for deduction is set. While in some cases, there is no maximum limit set for the deduction; in some, the income tax exemption under 80G is set at a limit of 10% of the adjusted gross total income of the charity donor.
Donation not only makes you happy but also lets you donate and save tax. Section 80G of the Income Tax Act’1961 provides tax exemption to both the charitable trust and the charity donor, provided the NGO meets all the stated rules of the act. You need to present the receipt of donation based on which you can avail the deduction.
Narayan Seva Sansthan Seva Dham Seva Nagar, Hiran Magri, Sector -4, Udaipur (Rajasthan) - 313001 INDIA
We have updated our donation process. For our existing donors need not fill any registration form please get your login details by clicking the follwing link: