In this article, let’s take a fresh look on how tax benefits on charity donation in India can be availed and claimed (as per 2020).
Donating to a charity and helping the hapless is a good deed, and no good deed ever goes unnoticed. Whenever someone donates to a charity, they become eligible for Tax benefits under Section 80G of Income Tax Act.
However, there are a few things one should keep in mind to become eligible for these tax benefits.
PS: Find out How to avail the tax benefits in the last paragraph.
If you want to avail the tax benefits, Before making your next donation action answer keep in mind the following things:-
Where is the donation being made?
These deductions are applicable for anyone who donates within a country. So donating funds to a foreign trust or political party doesn’t count as a deduction.
Is the Institution Listed for providing Tax benefits?
Another important thing to keep in mind is that all the donations are not eligible for tax benefits in India. Donations made to certain registered organizations and charitable relief funds are considered for tax benefits under 80G in India.
At the domestic level, an NGO in India to provide all the tax benefits shall be:
- Shall be registered U/s.12AA of Income Tax Act, 1961
- Shall be registered U/s 80G(5)(vi) of the Income Tax Act 1961
- Shall have legal MOA and Board of Directors with valid ID Proof
At the international level, to provide tax benefits to international donors:
- Shall be registered under section 6(1) (a) of the Foreign Contribution (Regulation) Act, 1976 (FCRA). Know more about FCRA
What is your Mode of payment?
Under Section 80G of I-T Act, the donations made to Listed charities can avail for the tax benefits only if the donation is made via Cash or Cheque.
How much amount can be claimed in Tax benefits?
The amount of donation that can be claimed under section 80G is bound by some rules. A donor can claim 50% or 100% amount donated to the charity depending on the institution the donation was made to.
How much of the amount donated can be claimed as a deduction and whether with or without an upper limit depends on the organization to which you are donating. So choose your Charity wisely if you want to claim that deduction.
How to avail the Tax benefits on Charity?
To avail the benefits of Tax deductions, you must provide the receipt of the donation made (as provided by the donee) as proof of the donation made. While taking the receipt, must make sure that the receipt contains the name, address, Pan Number of the trust, the registration number of the trust, name of the donor and amount donated, written in words and figures.
All this information must be provided while filing an Income tax return.
While SERUDS supports all kinds of charity causes, we also make sure our donors are fully equipped with every kind of tax benefit to be availed in India.