How to document donations to charities in India

Article 80G

Donating to a charity that will then qualify for Section 80G deductions is one of the best methods to reduce your tax liability while simultaneously doing your part to better the world. These must be legitimate trusts or organizations.

In order to encourage people to engage in philanthropic endeavors, Section 80G of the Income Tax Act primarily deals with charitable contributions. Tax deductions are available in this area for donations to specific organizations or funds. When submitting an income tax return, an individual may deduct money given to a qualified charity.

Eligibility for Section 80G

All taxpayers (individuals, businesses, and Hindu Undivided Families) are qualified to make charitable contributions under Section 80G and claim a deduction, subject to any applicable government-imposed restrictions. If NRIs donate to eligible trusts or institutions, they are also eligible for Section 80G benefits.

Gifts Allowed Under Section 80G

People who want to deduct expenses under section 80G must make sure the charity they are donating to is covered by the Act. Only contributions given to legitimate, legally recognized charities or funds are eligible for the appropriate deductions. After being registered under Section 12A, trusts and charities are eligible for an 80G certificate. Before making a donation to a charity, people are recommended to look up the organization’s qualifications.

Exemptions under Section 80G

Individuals may not deduct every donation they make in accordance with Section 80G. This clause does not apply to contributions made to foreign trusts or political parties, and donors cannot deduct such contributions from their taxes.

Section 80G deductions

Donations made to eligible trusts or charities that qualify for tax deductions must meet specific requirements.

The four general categories of donations that fall under Section 80G are listed below.

• 100% tax deduction for donations made in this category (no qualification requirements)

Donations made in this category are eligible for a 100% tax deduction and are not subject to any qualification requirements. Donations to the Prime Minister’s National Relief Fund, the National Foundation for Communal Harmony, the National/State Blood Transfusion Council, and other organizations are eligible for tax deductions.

Donations that qualify for a 50% tax deduction (without any upper limit) include contributions given to trusts like the Prime Minister’s Drought Relief Fund, the National Children’s Fund, the Indira Gandhi Memorial Fund, etc.

• 100% tax-deductible donations (limited to 10% of adjusted gross total income)

This category allows for deductions for contributions given to the Indian Olympic Association and local governments that support family planning. Only 10% of the donor’s Adjusted Gross Total Income is eligible for deductions in certain circumstances. Donations that go beyond this limit are rounded to the nearest 10%.

Donations that are eligible for a 50% deduction (up to 10% of adjusted gross total income) must be paid to any local government or agency that will use the money for charitable purposes. Only 10% of the donor’s Adjusted Gross Total Income is allowable as a deduction in these circumstances. Donations over this limit are limited to 10%.

Quantity of Deduction:

A donation under Section 80G must satisfy a number of fundamental requirements. The following paragraphs list some of the key points.

The only acceptable payment methods for donations are taxable or exempt income. Other non-taxable income sources do not qualify as a deduction for donations.

Clothing, food, medication, and other donations are not allowed under Section 80G; only contributions provided in cash or by check are accepted.

When it comes to contributions paid to the Indian Olympic Association, only businesses are qualified for deductions.

Only contributions given to legitimate, registered trusts are eligible for tax deductions. Donations made to political parties and organizations in other countries are not deductible.

Required Documents for Section 80G Deduction Claims

The following documentation is required to support Section 80G deduction claims made by individuals.

1. Properly Stamped Receipt: The trust or charity that receives a donation must produce a receipt. The name, address, and PAN number of the trust, the amount donated, and the donor’s name should all be listed on this receipt.
2. Form 58: Without Form 58, a donor’s donation will not be qualified for a 100% deduction and cannot be used to offset other expenses.
3. Registration Number of Trust: The Income Tax Department issues registration numbers to each qualifying trust; donors should make sure their receipts include this information. A donation may not be eligible for deductions if this registration number is not active on the date of the donation.

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