Donating to charitable institutions is considered a noble act since it helps one in detaching oneself from material comforts as well as in fulfilling social responsibility. By making donations one can also provide service to the Lord by taking care of His subjects. However, the most important factor about donating is the sense of satisfaction derived from the act by putting a smile on someone’s face.
There are multiple organisations to which one can donate in both cash and kind. Making donations has now become easier with the possibility of making an online donation just with a few clicks. You can make donations to charitable trusts and also help people locally and donate your time if possible. Making donations by giving time is considered to be as important as a cash donation if it is done with the right intentions.
The amount of donations and the kind of donation made is of little importance if you are doing it with the right intention. Therefore, one must always focus on giving their best in whichever form possible. It is a noble act that plays a significant role in bringing one closer to the Lord. Let us now introduce you to another dimension of making donations.
There is yet another unknown advantage that making donations can lead to which is saving tax under section 80G of the Income Tax Act. This act allows one to make donations to specific charitable institutions and trusts as a deduction from the gross total income prior to getting the taxable income.
Read with us to know about how you can benefit under section 80G by making donations to certain organisations and the right process that must be followed.
How Is 80G Donation Calculated?
Under section 80G, the donations made can be claimed for deducting the gross total income before getting the taxable income. However, the entity to which one is donating plays a significant role since only certain organisations have been notified for this purpose by the department of income tax.
There is no specific category of people who can avail this deduction. In most cases, every person is qualified to claim the tax deduction who has donated to specified institutions and relief funds set up by the government. It must also be kept in mind that donations made to any foreign trusts or political parties can not be taken as a deduction under section 80g.
Further, the deduction can be claimed under section 80g of the income tax act only when it has been made to the specific institutions via cash or cheque. You must be very careful while choosing an organisation to which you make the donations since the deduction will vary based on that. Additionally, the upper limit of donations made also changes with the organisation and should be checked before proceeding.
How Much of a Donation Is Tax Deductible?
The maximum donation that can be claimed is Rs 2000 if the donation has been made in cash. There is no maximum limit for deduction if the payment has been made via cheque or digital payment methods.
You can claim either 50% or 100% of the donation amount for deduction subject to with or without the upper limit depending on the entity that you are donating to.
There is a list of institutions that is updated by the Income Tax Department listing the entities and organisations and the percentage of deduction that can be claimed from donations made to each entity.
For example, the Prime Minister’s National Relief Fund and the National Defence Fund are two such entities set up by the central government on which a 100% deduction claim can be made without any upper limit. While other entities such as Jawahar Lal Nehru Memorial Fund and Prime Minister’s Drought Fund allow only a 50% claim as a deduction on the funds donated.
Which of the Following Donations Is Eligible at 100% for Deduction U/S 80G?
The Income Tax Department puts up lists of the organisations’ donations made to which come under 80g deduction. Along with stating the organisations, the list also details the percentage of deductions that can be claimed on these donations. This list is updated by the Income Tax Department from time to time.
Therefore, you must have a look at this list before donating to any organisation if you are looking forward to a 100% deduction claim on the donations made. The Prime Minister’s National Relief Fund and the National Defence Fund are examples of two such entities where you can get a 100% deduction claim without any upper limit placed.
How Do I Submit 80G Proof?
For submitting the 80G proof you will have to keep certain documents ready. Firstly, you must have the standard receipt which is issued by the trust or the organisation as proof of the donation. Make sure that this receipt consists of the basic details such as your name, address, PAN number of the trust, the registration number of the trust, the name of the donor as well as the amount donated.
You can then file an ITR filling in the necessary details and claim for a deduction. However, you must at all times be very careful about choosing the right organisation since only a few of them are covered under 80g donation and that too with a distinct percentage of deductions possible.
Making donations to charitable trusts and organisations, therefore, comes with manifold advantages. You can not just fulfil your social responsibility but also do tax saving on donation. It is a selfless act where one does something to help others without expecting anything in return which makes it a noble act. Thus, by making donations, you are entitled to blessings and at the same time, you can save your tax expense.
All you have to do is check the list provided by the Income Tax Department of the entities and organisations that are a part of the 80g deduction. Not just the presence of the organisation in the list, but you must also make sure that there is a 100 % deduction possibility without any upper limit on the organisation you have chosen.
We need to understand that we must make our contributions to society in whatever form we can. It is not possible to take the money along with us once we die and therefore, we must put it to some good use by helping those who need money. The charitable institutions are engaged in helping as many people as possible which can only be done if they have sufficient funds with them.
The only source of income for most charitable organisations is donations that help them to run their organisation without any obstacle. The least we can do is aid people with monetary contributions to help them create an impact in the world. It is not important to contribute a huge sum of money but to make some contribution since every bit counts.
Therefore, go check the list right now and familiarise yourself with the process of making contributions to the organisation you have chosen. These tax saving donations will help you not only in saving tax but also in earning a lot of blessings.