Charity can help you save tax. If you wish to claim tax benefits, make sure you donate to the approved institutions and NGOs. Read on.
There is no bigger joy than the joy of giving. And as Christmas and New Year celebrations take shape and colour, how about ending the year on a philanthropic note? This truly is a novel way to not only spread and share happiness but earn as well. Your donations to charities can help you save on tax while having a positive impact on the society you have been a part of. Also, if you manage this during the holiday season, it would actually help charitable trusts in their endeavour as their spends are high during this time. This may also help them manage their future budgets.
Obviously, the big question in your mind would be over how to go about it or how to begin. In fact, to begin with, you should give a deep thought to the beliefs and causes which have always been close to your heart. The next step should be proper identification of NGOs or charitable trusts involved and getting them on board. All these donations and philanthropic steps will help you in saving tax.
You can claim tax benefit under section 80G for donations made to trusts and approved charitable institutions. All you need to do is submit a receipt of the payment you have done to these institutions to claim the tax benefit.
Save Tax Under These Sub-sections Of Section 80 G Also
Section 80GGA: If the taxpayers have no business income and they donate to entities associated with scientific research or rural development, then they can claim 100 percent tax deduction under this section.
Section 80GGC: Any donation to a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951) or an electoral trust is eligible for 100 percent tax deduction under this section.
Donations Eligible For 100% Tax Deductions
- Prime Minister’s National Relief Fund
- National Defence Fund
- Prime Minister’s Armenia Earthquake Relief Fund
- The Africa (Public Contribution – India) Fund
- The National Foundation for Communal Harmony
- Approved university or educational institution of national eminence
- The Chief Minister’s Earthquake Relief Fund, Maharashtra
- Donations made to Zila Saksharta Samitis
- The National Blood Transfusion Council or a State Blood Transfusion Council
- The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air Force Central Welfare Fund.
- National Illness Assistance Fund
- Chief Minister’s or Lt. Governor’s Relief Fund
- National Sports Fund
- National Cultural Fund
- Central Govt.’s Fund for Technology Development & Application
- National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation & Multiple Disabilities
- Andhra Pradesh Chief Minister’s Cyclone Relief Fund
Donations Eligible For 50% Tax Deduction
- Jawaharlal Nehru Memorial Fund
- Prime Minister’s Drought Relief Fund
- National Children’s Fund
- Indira Gandhi Memorial Trust
- Rajiv Gandhi Foundation
Donations Not Eligible For Tax Deductions
- Donation in kinds such as clothes, medicine, utensils, and food to NGOs.
- Any donation made to foreign charitable trusts.
- For donations made to political parties against their miscellaneous expenses like brochures, souvenirs or pamphlets.
It’s a great idea to make donations towards charity this Christmas. If you wish to claim the tax benefit, make sure you donate to the approved institutions and NGOs. Ensure that the institution you are donating to is listed as non-profit organisations under Section 25 of Companies Act. Also, there are some charitable organisations where the tax deduction is limited to 10% of the adjusted gross total income. It would be wise to assess how much tax deduction you can avail by contributing to a particular institution.