Under Section 80G of the Income Tax Act, the deduction you can claim for donations to charitable trusts depends on two main factors: 1. Type of Trust or Institution 100% Deduction:Some charitable trusts are eligible for a 100% deduction. This means you can claim the entire amount donated as a deductRead more
Under Section 80G of the Income Tax Act, the deduction you can claim for donations to charitable trusts depends on two main factors:
1. Type of Trust or Institution
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100% Deduction:
Some charitable trusts are eligible for a 100% deduction. This means you can claim the entire amount donated as a deduction. -
50% Deduction:
Other institutions may be eligible for only a 50% deduction, so you can claim half the donated amount.
2. Mode of Donation
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Non-Cash Donations (e.g., cheque, digital transfer):
- The full percentage (100% or 50%) is allowed as a deduction, without any overall cap.
-
Cash Donations:
- If you donate in cash, the deduction is capped at 10% of your Adjusted Gross Total Income for that year.
Example Scenarios
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Scenario 1:
You donate ₹10,000 via bank transfer to a trust eligible for 100% deduction.
Deduction Allowed: ₹10,000 -
Scenario 2:
You donate ₹10,000 via bank transfer to a trust eligible for 50% deduction.
Deduction Allowed: ₹5,000 -
Scenario 3:
You make a cash donation of ₹10,000 to any eligible trust.
Deduction Allowed: Limited to 10% of your Adjusted Gross Total Income (even if the trust qualifies for 100% or 50% deduction).
Key Points to Remember
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Approval is Essential:
The trust must be approved under Section 80G for you to claim the deduction. -
Documentation:
Always obtain a valid receipt or certificate from the trust as proof of donation. -
Choose Non-Cash Methods:
To maximize your deduction, it’s preferable to donate via non-cash modes (like cheque or online transfer) since these are not subject to the 10% limit on cash donations.
While donations made to the PM CARE Fund qualify for a 100% deduction under Section 80G of the Income Tax Act, you must have proper documentation to claim the benefit. Key Points: Eligibility for Deduction:Donations to the PM CARE Fund are eligible for deduction under Section 80G if they are made thRead more
While donations made to the PM CARE Fund qualify for a 100% deduction under Section 80G of the Income Tax Act, you must have proper documentation to claim the benefit.
Key Points:
Eligibility for Deduction:
Donations to the PM CARE Fund are eligible for deduction under Section 80G if they are made through eligible modes (like cheque, online transfer, etc.) and the fund is registered for this benefit.
Importance of Receipts:
To claim the deduction, the Income Tax Department requires you to provide proof of donation, typically in the form of an official receipt or certificate issued by the PM CARE Fund.
No Receipt, No Deduction:
If you do not have a receipt, you may not be able to claim the deduction on your tax return. The receipt serves as the evidence that the donation was made and is crucial for the tax audit process.
What You Can Do:
Try to obtain a duplicate receipt or certificate from the PM CARE Fund if possible.
If you made the donation online or via cheque, keep your bank statements or cheque details as supporting evidence. However, note that these may not always be accepted in place of an official receipt.
Final Thought:
See lessWhile the donation itself is eligible for a deduction under Section 80G, lacking the official receipt may result in disallowance of the deduction. It’s always best to secure and retain proper documentation when making such donations.