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How to claim income tax benefit on donations; get up to 100% deduction - GST Station

How to claim income tax benefit on donations; get up to 100% deduction

How to claim income tax benefit on donations; get up to 100% deduction

    Persons donating any amount to charitable organisations can claim 100 per cent income tax deduction.

    NEW DELHI: There have been several investment options available in India for reducing the income tax liability. Some of the conventional investment options for availing income tax benefits include National Pension Scheme, Provident Fund options such as Voluntary Provident Fund (VPF) through employer, Public Provident Fund (PPF), Equity-Linked Savings Scheme (ELSS), tax saving fixed deposits (FD) in banks and post offices, etc. Out of these tax savings investments, some even provide benefits at the time of the maturity, i.e., the amount received on redemption is also tax-exempt.

    Other than investing options, tax exemptions can be claimed on interest paid on loan EMIs, expenses incurred on treatment charges paid for parents falling under senior citizen category, insurance premiums paid for group insurance cover, stamp duty and registration fees paid on house purchase, expenses incurred for the early childhood education of children, etc. 

    Some persons, having adequate sources of income, are capable of donating money for a cause that they believe in. Donating money is subject to the ‘earnings potential’ and the ‘willingness’ to support a cause. For all those who are interested in donating money towards a cause can claim income tax benefits for the amount donated.

    According to Section 80G of the Indian Income Tax Act, 1961, an individual donating any amount to the charitable organisation and relief funds can claim income tax deductions. Persons donating any amount to charitable organisations can claim 100 per cent income tax deduction provided the entity should be notified by the Income Tax Department for the specified purpose. 

    According to the prescribed guidelines by the government with effect from the assessment year 2018-2019, there is no upper limit on the income tax deduction amount if an individual is donating the money through cheque or other digital payment methods such as debit cards, net banking, etc. The donation amount has been capped at Rs 2,000 if the person is donating the amount in cash.

    Before making the donations, individuals should make sure that the entity to which they are donating falls under specified organisations listed by the Income Tax Department. The I-T Department timely updates the list of entities with the permissible deductions and the quantum of donations allowed. The state-owned entities such as the National Defence Fund and the Prime Minister’s National Relief Fund are some examples of entities to which a person can donate any amount and can claim 100 per cent income tax deduction.

    Source- Times Now.

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