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Tax Saving By Donations? Keep These 5 Points In Mind Before You Give Your Money

Adhil Shetty

As per the provisions of the Section 80G of the Income Tax Act, any individual, company or organisation can contribute money and claim deductions while submitting their Income Tax returns. Read on to know more.

Tax Saving By Donations? Keep These 5 Points In Mind Before You Give Your Money

Every year while assessing our investments, we seek newer and better ways to minimise our taxable income. The Section 80C is the most popular and best way to save taxes through investment, however, once the exemption limit is reached, it is important to look beyond it.

One way to do this is to give a certain portion of your income as a donation. This provision is made available under Section 80G of the Income Tax Act. However, while making these donations, you need to be careful about some conditions to ensure that it fulfils all the criteria prescribed under the Act.

Who Can Contribute?

As per the provisions of the Income Tax Act any individual, company or organisation can contribute money and claim deductions while submitting their Income Tax returns.

How To Contribute: Cash Or In-Kind?

Charitable organisations and relief funds seek time-to-time financial or in-kind contributions from people. Many people contributing to such organisations seek for deductions of the donated amount from the Income Tax authorities. If you wish to do the same, do remember that in-kind contributions like clothes, books, blankets etc. are outside the scope of Section 80G, and hence not eligible for deductions.

How To Make The Payment?

In-cash donations can be offered to charitable organisations in the form of cheques, drafts or cash as per the provisions of the Income Tax Act, 1961. However, donations for exemption under Section 80G has its cap for cash deposit at Rs 10,000 and anything above it needs to be paid by cheque or demand draft

Details Needed When Submitting ITR

While submitting your Income Tax Return, do specify the amount contributed and also the name, PAN and address of the organisation to claim deductions under Section 80G of the Income Tax Act. Remember to claim a standard receipt issued by the trust/fund entity as proof of the donation that contains the name, address, PAN and registration number of the trust, the name of the donor and amount donated. You should be careful about the organisation you are donating to and do a thorough background check of NGOs and charitable trusts.

A significant point to note here is that for salaried personnel, no deductions on donations made under Section 80G will be reflected in Form 16. To claim the tax benefit you will have to furnish details of donations made while filing the tax return and claim a refund from the I-T department.

Know 100% or 50% Criteria Well

Donations made under Section 80G may fall under the 100% or 50% exemption groups. Hence, it is important to do your research before making the payment.

Popular Donation Funds Qualifying For 100% Exemption

  • National Defence Fund
  • Prime Minister’s National Relief Fund
  • National Foundation for Communal Harmony
  • National Illness Assistance Fund
  • Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund
  • National Blood Transfusion Council or to any State Blood Transfusion Council
  • National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
  • National Sports Fund
  • National Cultural Fund
  • The Maharashtra Chief Minister’s Relief Fund
  • National Children’s Fund
  • Chief Minister’s Earthquake Relief Fund, Maharashtra
  • Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat
  • Africa (Public Contributions – India) Fund
  • Swachh Bharat Kosh
  • Clean Ganga Fund
  • National Fund for Control of Drug Abuse

Popular Donation Funds Qualifying For 50% Exemption

  • Jawaharlal Nehru Memorial Fund
  • Prime Minister’s Drought Relief Fund
  • Indira Gandhi Memorial Trust
  • Rajiv Gandhi Foundation

With all the conditions attached to Section 80G of the Income Tax Act, be ready to contribute some funds for a good cause before this financial year ends.

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