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Forwarding a helping hand to the needy in the form of funds is a noble action. To support this charitable cause, the government has allowed tax exemptions on donations made to any charitable organisation under Section 80G.
This scheme also allows a 100% deduction on some donations with limits.
Keep reading to know more about this scheme and its filing steps.
Section 80G defines a tax exemption applicable to relief funds or funds spent on charitable causes. Taxpayers can claim the applicable deductions under Section 80G of the Income Tax Act.
However, individuals should know that this exemption comes with specific clauses. Not every donation falls under the applicable deductions.
This section allows deductions under prescribed funds that an organisation, individual, enterprise, etc., can claim. They have to make the donations via a draft, cheque or cash.
This would substantiate an individual's claim against a charitable action. However, this donation should be more than ₹2,000 if made in cash. So, donations above ₹2,000 should be made in modes other than cash to qualify for 80G deduction. Previously, this limit for cash transactions was ₹10,000.
This rule became applicable under section 80G deductions from the FY 2017-18. Hence, entities should make such contributions in the form of a cheque or draft to qualify for exemptions.
The government doesn't allow tax deductions on donations made in the form of a kind such as material, food, clothes, books, medicine, etc., under Section 80G of the Income Tax Act.
Individuals should know that donations specified under Section 80G are eligible for either a 100% or a 50% deduction. These deductions may or may not have restrictions depending on the terms.
Let's check what the eligibility criteria to claim 80G of the Income Tax Act are.
Individuals should know that different causes are specified under the exemption percentages. A taxpayer can check whether their charitable act falls under the 80G exemption list before filing returns.
Technically, every individual, Hindu Undivided Families and enterprises are eligible to claim donations under Section 80G. However, it follows some rules laid down by the government.
NRI's can also claim the 80G tax benefit provided they have contributed to registered or trusted institutions.
Let's check what factors qualify under different percentages of tax deductions.
Types of Donations Applicable for Deductions Under Section 80G
The following tables list out the types of donations eligible for the maximum limit of deductions under 80G and the percentages.
Apart from no restriction on qualifying limits, there is a 10% adjustment of gross total income.
Individuals should know that adjusted gross income in a taxable income is calculated after considering deductions other than those under Section 80G. Such deductions also reduce certain incomes, such as long-term capital gains.
However, the mentioned donations should be made in the form of a cheque, demand draft, etc. Payment made in the form of cash is exempt from benefits.
Let's check the documents required to claim the mentioned section.
Eligible taxpayers have to submit the mentioned documents to file a tax return without hassle.
The data mentioned above explains Section 80G and several factors involving it. Individuals should check the official website for more information on its terms and conditions.
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Disclaimer: This information is added only for informative purposes and collected from different sources across the Internet. Digit Insurance is not promoting or recommending anything here. Please verify the information before making any decisions.
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