Helping someone or doing charity is an excellent job. Not only the Lord but the income tax department also admits this fact. Also, you can get blessings and positivity after making donations. *Section 80G of the Income Tax Act offers a tax deduction on contributions made to certain charitable institutions prescribed under the Income Tax Act, 1961.* (*Reference: https://cleartax.in/)
What is a Charitable Donation?
Contributions made to certain relief funds can be claimed as a deduction under Section 80G of the Income Tax Act. However, not all are eligible under section 80G. Prescribed funds are categorized as qualified deductions. Also, this can be claimed by any taxpayer, be it any people, organization, or firm.
Who Are All Eligible?
- Donations made in cash or cheque are permitted for charity tax deductions. Also, donations made in cash do not qualify for deductions going above 10,000.
- Donations made in kind are not eligible for charity tax deductions.
- Also, cash exceeding Rs 2000 is not eligible for deductions.
- The donation moving beyond Rs 2000 can be of any mode rather than cash.
The certification helps donors reduce their tax liability by between 10% to 50% on the amount donated. However, the 80 G certification does more than allow donors to claim tax exemptions on their donations. It also provides organizations with several tax benefits. The institution can get an exemption of 10% for the gross income got through donations and contributions.
Moreover, the Income Tax Department has the power to approve or reject such requests upon disqualification of the non-profit organization or dissatisfaction with its activities. While the primary role of 80G certification is to encourage donors to donate funds to non-profit organizations, it can help organizations in several ways.
Tax Benefits to Donors
Income Tax: You receive an instant charity tax deduction when you contribute to DAF.
Cash Deduction: up to 60% of AGI
Also, the unused deductions get forward
Capital Gains: You will be receiving no capital gains tax for the gifts of assets like real estate, securities, etc.
Tax-free growth: Your investments in DAF can help you with tax-free growth.
AMT: If you are subject to minimum tax then your alms will reduce with your AMT.
If you’re looking for a place where you can donate your hard-earned money and get the tax benefit, then download our Donation app SatvikDaan and donate to verified NGOs without getting worried. You can even create a post, check the needs of the NGOs, and then fulfill them if you’re willing. Also, as a user, you can create a donation post where you can add any reusable items that you’re willing to donate to any person.
NOTE: The information provided above should be taken into consideration with the help of a legal/tax advisor. Donors should ask their tax advisor regarding any specific situations.