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
-
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.
In recent updates, the method to compute income from futures and options (F&O) trading (treated as speculative business income) has shifted from the traditional mark-to-market approach to a turnover-based method. Here's how it works: Step 1: Determine Your Turnover Turnover Calculation:For FRead more
In recent updates, the method to compute income from futures and options (F&O) trading (treated as speculative business income) has shifted from the traditional mark-to-market approach to a turnover-based method. Here’s how it works:
Step 1: Determine Your Turnover
For F&O trading, the turnover is now defined as the aggregate sale consideration of all contracts you traded during the financial year.
Step 2: Deduct the Purchase Cost
From the total turnover, subtract the total cost of acquiring these contracts (the purchase price paid when entering the contracts).
Step 3: Deduct Direct Expenses
Deduct all direct expenses incurred in trading, such as:
Step 4: Arrive at Your Net Profit or Loss
The result after these deductions is your net profit (or loss) from F&O trading. This figure is treated as speculative business income and is taxed at your applicable business income slab rates.
Summary Table
Key Points to Remember
Read: How to calculate capital gain on intra-day trading of shares?
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