Summary: Did you know that you can claim the deduction for up to 50% or 100% of the donated amount based on the institution to which you have donated. Keep reading the article to find out how you can do it.
You always feel good when you help a cause or contribute to society with donations and charity. And, do you know what’s the best thing about it when you donate as a business or a professional? You get significant tax benefits!
For this nobility gesture, the government has also extended its support and offers tax deductions if you donate any amount. Section 80G of the Indian Income Tax Act supports tax deduction for contributions made to a specific relief fund or a charitable institution by any individual or business.
If you make donations, then you can easily claim tax deduction under the section 80G in addition to Section 80C and get the maximum tax benefits. Before we dive into more details, first, we will look at what exactly is Section 80G in Income Tax Act.
Section 80G of the Income Tax Act is the provision that lets taxpayers claim deductions on several donations made to charitable institutions and funds. This section’s main purpose is to provide incentives to organizations or individuals involved in any type of social, cultural, philanthropy, and economic development activities.
These taxpayers are eligible to claim deductions under the 80G tax regime for companies, individuals, and employees:
However, not all the donations made are eligible for deduction within Section 80G. Only those deductions made to prescribed funds (described below) will be qualified as the deduction.
Note: This deduction can be claimed if an individual taxpayer chooses to pay taxes according to the new tax regime with certain restrictions and conditions (115BAC).
You can claim Section 80G deductions as a taxpayer for all the donations you made by using the following modes.
Note: Contribution like food, clothes, materials, medicines, etc., and donations above 2K in cash are not qualified for deduction in Section 80G.
All donations specified within Section 80G are eligible for 100% or 50% deduction with or without restriction.
Suggested Read: New Tax Regime vs Old Tax Regime
Here is the list of donations that are eligible for deduction without qualifying limit.
Look at the donations lists that are eligible for 100% deductions without qualifying limit:
Here are some of the Funds and Trusts that are eligible for 50% deduction without qualifying limits:
Note: Donations made to the last three funds are not eligible for deduction from the Financial Year 2023-24 Onwards.
If you want to claim this deduction, you need to submit the following details within your income tax return form:
These details need to be mentioned within the respective tables provided in the ITR.
The tax benefit you will receive will depend on the applicable tax rate.
For example, Mr. X is a salaried employee and Ms. P owns PVT. LTD. Company. Both of them donated INR 1,60,000 to an NGO. Take the total income of each of them equals to INR 7,00,000. The tax benefit they will get is shown in the table below:
| Details | Mr. X is an individual | Ms. P owns a PVT. LTD. Company |
|---|---|---|
| i) Income for the financial year 2023-24 | 7,00,000 | 7,00,000 |
| ii) Donation for the NGO | 1,60,000 | 1,60,000 |
| iii) Qualifying amount for deduction (50% of the donation made) | 80,000 | 80,000 |
| iv) Amount of deduction u/s 80G (gross qualifying amount subject to a maximum limit of 10% of the gross total income) | 50,000 | 50,000 |
| v) Taxable income after deduction | 6,20,000 | 6,20,000 |
| A. Tax payable after considering a donation -Mr X tax calculation as per the income tax slab rate -Ms. P. Pvt Ltd. tax calculated at 30% | 36,500 | 1,86,000 |
| B. Tax payable before donation | 52,500 | 2,10,000 |
| C. Tax Benefit from Section 80G deduction | 16,000 | 24,000 |
Note: This computation has been done based on the tax slab rates applicable according to the old tax regime. This is because the taxpayer will only get the tax deduction benefit if he chooses to pay tax within the old tax regime.
If you want to claim the tax deduction within Section 80G, then you should submit the following documents to support your claim.
Wrap Up
After reading this article, you might have got an idea about all the deductions you can claim under Section 80G. So, next time when you plan to donate to any Trust, do not hesitate as you can easily claim your deduction in accordance with Section 80G.
However, always check the deduction criteria before you start claiming your donation amount as per your taxable slab rates. If you don’t want any such hassles while filing out your income tax explore any of the income tax software which can help you with these taxations.
Yes, donations made to the eligible charitable trusts and funds are eligible for deductions within the new tax regime under Section 80G. However, these deductions are subject to particular conditions and limits.
Standard Deduction and deduction under section 80CCD (2) for employer's contribution to NPS are allowed in the new tax regime.
Yes, political donation tax is deductible within the new tax regime. 100% donated amount to the political parties or electoral trusts are allowed as deductions within the Section 80GGC.
Some of the tax benefits of the new tax regime include lower tax rate, simplified tax structure, increased rebate threshold, and so on.
Introducing Xoriant Corporation, leading player in the era of product development, engineering, and consulting… Read More
The dark web is a part of the internet that isn't indexed by standard search… Read More
A strong sales pipeline is indispensable for the expansion of every business organization. It's simply… Read More
In our earlier blogs, we have already discussed website cookies. Now, we will try to… Read More
Remote desktop software, which is also known as remote access software, allows users to interact… Read More
Human resource planning is the simplest way to describe strategy for ensuring that the… Read More
