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Tax deductions on charity: Everything you need to know

How does Tax Deduction Work for Different Donations?

Under Section 80G of the Indian Income Tax Act, a tax deduction is made available on donations made to a charitable organisation. The Government has executed this to encourage acts of kindness and ensure that you receive a benefit from it as well. Any taxpayer, whether resident or non-resident can claim deductions under this section.
However, only contributions made to particular relief funds and charitable institutions can be claimed as a deduction. The IT department has an updated list of institutions that specifies the claim limit applicable to deductions on donations.

While non-monetary donations like food, clothes, household items are not considered for deductions, monetary contributions can be made via draft or cheque. Cash can also be donated, but you can only avail a maximum deduction on the charity of up to ₹2,000 if the donation is made in cash. Under 80G, the donation amount that can be claimed as a deduction is fixed as per specific regulations. It varies between 50-100% of the donation sum, depending on whether the entity you’re donating to is ‘With’ or ‘Without’ upper limit.

Donations to organisations like National Children’s Fund, National Foundation for Communal Harmony and National Cultural Fund are eligible for 100% deduction without any qualifying limit while causes like Jawaharlal Nehru Memorial Fund and the Prime Minister’s Drought Relief Fund are eligible for 50%.

Donations made towards any purpose for redevelopment or repair of any religious place can also qualify for a deduction of up to 50%. This includes any notified temple, mosque, gurudwara, church or another religious place.

Claiming your Tax Deduction on Charity:Now that you have done your good deed by donating, how do you incorporate this into your Income Tax returns? When you donate, ensure that you receive a receipt or a donation certificate issued by the trust/organisation as proof of contribution.
This receipt should contain all essential details including the name of the receiving trust, their address, registration number, amount contributed and PAN. Your name should also be clearly mentioned. This will be crucial at the time of filing your income tax return.

Tax deduction is just one of the benefits of donating. According to your preferences, you can check the list of organisations and entities and see what causes appeal to you.

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