Section 80G of the Income Tax Act: Tax Deductions for Donations Did you know the donations you make can help you save tax? India is a country of beliefs and devotion. It is an age-long practice of making donations and contributions for good causes in good faith to earn solemn requital for good deeds in India. People of India have been donating in cash and in kind to various trusts, NGOs, charitable organizations, temples etc. sometimes out of kindness, sometimes out of faith. But did you know that these contributions done for the sake of humanity can help you save tax? Here’s how: As per the provisions of section 80G of Income-tax Act, 1961, deductions are available for donations to certain notified funds, charitable institutions or other institutions/ funds set up by the Government of India.
Who can claim deductions under section 80G? Any taxpayer whether resident or non-resident can claim deductions under section 80G.
How to make donations/ contributions so as to take deductions under section 80G? Mode of payment: Cash/ Cheque/ Draft However, if donation exceeding Rs. 2,000/- is made in cash, no deduction is allowed. Further, contributions made in kind also do not qualify for any deduction under this section.
How much deduction can be claimed under section 80G? Deduction of the amount contributed/ donated from Gross Total Income of the assessee for the previous year depends on the kind of funds/ organizations where such amount is contributed/ donated. Deduction is available as a certain percentage of contributions/ donations made. For the purpose of calculation of the amount that is available as a deduction from Gross Total Income, we can classify the deductions available as: