donations under section 80G
The Indian government provides tax benefits under section 80G of the Income Tax Act, 1961 to encourage charitable contributions. An individual must donate to a charitable organisation that meets the conditions specified in Section 80G (5) of the Income Tax Act to claim a tax deduction.
Filing income tax returns (ITR) is complex but essential. If you look for the silver lining, it gives you with the chance to optimize your tax liability! A great avenue for tax deduction in India is through donations made to eligible NGOs under Section 80G of the Income Tax Act, 1961. By making use of this provision, one can contribute to worthy causes and initiatives, while also reducing their taxable income.
It is common for people to donate for child education in India or contribute to the welfare of disabled people, with the intention of giving back to society. The Indian government supports such charitable acts by providing tax benefits under section 80G of the Income Tax Act, 1961.
What is the Section 80G of the Income Tax Act?
Section 80G of the Income Tax Act in India enables individuals and organisations to claim tax deductions on donations made to certain eligible charitable funds and institutions. The section aims to incentivise philanthropy by offering tax benefits for charitable causes.
Taxpayers can avail of deductions from their taxable income for the sum of money donated to specific NGOs or charitable funds under Section 80G. They can claim deductions ranging from 50% to 100% of the amount donated, based on the specific scheme or fund, and the nature of the receiving organization.
The Government, however, does have specific conditions and restrictions for donations in order to qualify for deductions under Section 80G. The conditions include registration of the recipient organization under Section 80G, as well as the adherence to the limits and restrictions set by the Income Tax Act, 1961.
Who Can Claim a Deduction under Section 80G?
All taxpayers In India are entitled to claim a deduction under Section 80G of the Income Tax Act if they have made monetary contributions to specified funds, institutions, or associations recognized for this purpose.
- Individuals
Any person, whether salaried or self-employed, making donations to eligible NGOs can claim tax deductions under Section 80G. The sum of money they donate shall be an organisation that can claim tax deductions under Section 80G. The individual’s donation will be deducted from their taxable income, ultimately lowering their overall tax liability.
- Hindu Undivided Families (HUFs)
HUFs are joint family structures recognised under Hindu law. Just like in the case of individuals, the sum of money donated to eligible charitable institutions shall be deducted from the taxable income of the HUF.
- Companies
Companies of diverse types can claim tax deductions under Section 80G for donations made to eligible NGOs, including domestic companies, public or private limited firms, and multinational corporations. Â It includes domestic companies, public or private limited companies, as well as multinational corporations. The donated amount shall be deducted from the total income of the company, and hence reduce its taxable income.
One can claim a deduction for donations under section 80G made in the form of cash, cheque or electronic payments. Cash donations exceeding INR 2000, however, are not eligible for deduction. One must also remember that donations made in kind are not eligible for deduction under this provision.
