Donations Under Section 80G and How to claim deduction for this

Section 80G :

Section 80G of the Income Tax Act provides tax deductions for donations made to specified charitable institutions and funds. This deduction is available to individuals, Hindu Undivided Families (HUFs), companies, and other entities. It serves as an incentive for taxpayers to contribute to social causes by encouraging a culture of charity.

Who Can Claim 80G Deduction?

Any taxpayer, be it an individual, HUF, company, or any other entity, can claim 80G deduction, with a condition that they have made eligible donations.

Eligible Donations to claim 80G Deduction:

Not all donations qualify for 80G deduction. The Act specifies certain institutions and funds to which donations must be made eligible. These generally include:

• Donations to the Prime Minister's Relief Fund or the National Defence Fund: These are typically 100% deductible, meaning the entire donation amount is eligible for 80G deduction.
• Donations to certain charitable institutions and religious trusts: These can include donations to organizations focusing in areas like education, healthcare, poverty alleviation, and preservation of art and culture. The 80G deduction percentage may vary, often being 50% of the donation amount.
• Donations for renovation or repair of notified temples, mosques, gurudwaras, churches, or other places of worship: These may also be eligible for 80G deduction, often at 50% of the donation amount.

Types of 80G Deduction:

80G deductions be broadly categorized into two types:

• 100% Deduction without Qualifying Limit: Donations to certain funds, like the Prime Minister's Relief Fund or the National Defence Fund, qualify for a 100% deduction. This means the entire donation amount is deductible from your taxable income, without any qualifying limit.
• 50% Deduction with or without Qualifying Limit: Donations to many charitable institutions and trusts qualify for a 50% deduction. Some of these may have a qualifying limit, meaning the deduction is limited to a certain percentage of your adjusted gross income. Others may not have a qualifying limit.

How to Claim 80G Deduction:

To claim 80G deduction, you need to furnish the following details in your income tax return:

• Name of the Donee: The name of the charitable institution or fund receiving the donation.
• PAN of the Donee: The Permanent Account Number (PAN) of the recipient organization is mandatory for claiming 80G deduction.
• Address of the Donee: The registered address of the recipient organization.
• Amount of Donation: The amount you donated.

Documents Required for Claiming 80G Deduction:

The most important document to claim Section 80G Deduction is the donation receipt. This receipt should contain the following information:

• Name and address of the organization you're donating to.
• PAN of the donee organization.
• Name of the donor.
• Amount of donation (both in figures and words).
• Date of donation.
• Signature of the authorized signatory of the donee organization.

Important Points to Remember to claim 80G deduction:

• Ensure the donation receipt is duly signed and stamped by the recipient organization.
• Keep all your donation receipts organized and readily accessible during tax filing.
• Donations in cash exceeding Rs.2,000 are generally not eligible for 80G deduction. It's advisable to make donations through cheque, bank draft, or online transfer.
• Donations made to political parties do not qualify for Section 80G deduction.

Benefits of Donating Under Section 80G:

• Reduced Taxable Income: Donations under 80G reduce your taxable income, leading to lower tax liability.
• Supporting Social Causes: You can contribute to causes you believe in and make a positive impact on society.
• Financial Planning: Donations under 80G can be a part of your overall financial planning strategy.

Conclusion:

Donations under Section 80G offer a dual benefit i.e. the satisfaction of contributing to society and the advantage of reducing your tax burden. By understanding the eligibility criteria, qualifying donations, and the process of claiming deductions, you can effectively utilize this provision to maximize your tax savings while supporting social causes you care the most about by making an influential contribution towards the society.