Procedure for Claiming Deduction on Donations by a Company (Section 80GGB)

1. Ensure Eligibility

• Applicable Provision:
  • Companies (and other entities like firms, LLPs, etc.) can claim the deduction under Section 80GGB.
• Recipient Requirements:
  • The donation must be made to a politically registered party (registered under Section 29A of the Representation of the People Act, 1951) or an electoral trust.
• Mode of Donation:
  • The donation must be made via non-cash methods (e.g., bank transfer, cheque, UPI, or digital payment).

2. Maintain Proper Documentation

• Proof of Donation:
  • Keep a copy of the donation receipt or certificate provided by the political party.
  • Retain bank statements, cheque copies, or digital transaction details showing the payment.
• Certificate:
  • The political party should issue a certificate indicating that the donation has been received and is eligible for deduction under Section 80GGB.

3. Claiming the Deduction

• Filing the Return:
  • When filing the company’s Income Tax Return (ITR), report the total donation amount under Section 80GGB.
• Supporting Documents:
  • Although the certificate and proofs should be maintained by the company, ensure they are available in case the tax authorities require verification.

4. Additional Tips

• Non-Cash Requirement:
  • Remember, cash donations are not eligible for this deduction.
• Timely Filing:
  • Ensure that the donation is accounted for in the financial year in which it was made and reported on the ITR.
• Consultation:
  • If in doubt, consult a tax professional to ensure that all conditions are met and that the proper procedure is followed.

By following these steps, a company can effectively claim a 100% deduction on donations made to eligible political parties under Section 80GGB, thereby reducing its taxable income.

Read:How an Individual can get deduction of donation made to political parties?

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:

• Contact the PM CARE Fund:
  Try to obtain a duplicate receipt or certificate from the PM CARE Fund if possible.
• Maintain Alternative Proof:
  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:
While 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.

The Income Tax Act offers benefits for electric vehicle (EV) purchases—but the benefits vary depending on whether you’re an individual or a business.

For Individuals

Under Section 80EEB, if you take a loan to purchase an electric vehicle, you can claim a deduction on the interest paid on that loan. The maximum deduction allowed is ₹1,50,000. This benefit helps lower the effective cost of borrowing and encourages the use of environmentally friendly vehicles.

For Businesses

If a business purchases an electric vehicle for commercial use, the EV is treated as a fixed asset and is eligible for depreciation under Section 32. In addition, the government may offer accelerated or additional depreciation benefits (for example, an extra 15% of the purchase cost) to promote green investments. This means you can reduce your taxable income by writing off a larger portion of the asset’s cost in the early years.

Quick Comparison

Key Points to Remember

• Section 80EEB: Only available for interest on loans taken for purchasing an EV—direct purchase cost isn’t deductible.
• Depreciation: For business use, claim depreciation as per normal provisions plus any additional rates offered for green investments.
• Always keep proper documentation (loan agreements, interest receipts, purchase invoices) to support your claims.
• These benefits are subject to updates with each budget, so it’s wise to check the latest notifications or consult a tax professional.

Under Section 80D of the Income Tax Act, you can claim a deduction on the premiums paid for medical insurance. Here’s how it works:

1. Who Is Eligible?

• Self, Spouse, and Dependent Children:

  • For individuals below 60 years, you can claim a deduction of up to ₹25,000 on the premium paid.
  • If you or any of these insured persons are senior citizens (60 years and above), the limit increases to ₹50,000.

• Parents:

  • If you pay the premium for your parents, you can claim an additional deduction:
    • Up to ₹25,000 if your parents are below 60 years.
    • Up to ₹50,000 if your parents are senior citizens.

• Preventive Health Check-Up:

  • You can also include expenses for preventive health check-ups (up to ₹5,000) within these limits.

2. Steps to Claim the Deduction

1. Keep All Premium Receipts:

   • Make sure to collect and safely store your premium payment receipts or bank statements as proof of payment.

2. Report in Your Income Tax Return (ITR):

   • When filing your ITR (using ITR-1, ITR-2, etc.), enter the details of the medical insurance premiums paid in the appropriate section (usually under “Deductions under Chapter VI-A”).
   • Include the amount paid for self, spouse, children, and parents separately, if applicable.

3. Verify Your Documentation:

   • Ensure that your insurance policy is active and that the premiums are actually paid in the relevant financial year.
   • Retain the documents in case of any future inquiries by the tax authorities.

3. Example Scenario

Let’s say you are below 60 years old and have paid the following in a financial year:

• Premium for Self, Spouse, and Children: ₹20,000
• Premium for Parents (who are senior citizens): ₹40,000
• Preventive Health Check-Up Expenses: ₹5,000 (included within the above limits)

Total Deduction Claimed:

• ₹20,000 (for self, spouse, and children) + ₹40,000 (for parents) = ₹60,000

This amount is fully deductible from your taxable income, thereby reducing your tax liability.

Final Thoughts

Claiming a deduction on your medical insurance premium is a straightforward way to reduce your tax liability. Ensure you have the proper documentation and correctly report these amounts when filing your ITR.

Read: Can we get deduction of medical expenditure incurred on the health of senior citizens under the income tax act?

When it comes to intra-day trading (buying and selling shares on the same day), the Income Tax Act does not treat the profits as capital gains. Instead, such trading is classified as speculative business income. This means the traditional capital gains computation method doesn’t apply.

Key Points

• Not Capital Gains:
  Intra-day transactions are considered speculative because the shares are not actually delivered; they are bought and sold within the same day. Thus, the profits or losses from these transactions are treated as business income.

• Calculation as Speculative Business Income:
  To compute your net income from intra-day trading, follow these steps:

  1. Calculate Turnover:
     Sum up the sale consideration of all intra-day trades (i.e., the total amount received from selling shares).

  2. Deduct Purchase Cost:
     Subtract the total purchase cost of those trades (i.e., the total amount paid to buy the shares).

  3. Deduct Direct Trading Expenses:
     Also deduct any brokerage fees, transaction charges, and other direct expenses incurred while trading.

  4. Net Speculative Business Income:
     The resulting amount is your net profit (or loss) from intra-day trading, which will be taxed as business income according to your applicable slab rates.

Example Calculation

Additional Considerations

• Set-Off & Carry Forward of Losses:
  Losses from speculative transactions can only be set off against speculative income and can be carried forward for one year.

• Record-Keeping:
  It’s important to maintain detailed records (trade confirmations, brokerage statements, etc.) for each transaction to substantiate your calculations.

Read: How to calculate capital gain on future and options trading?