Skip to main content

Income Tax deduction on donations

Outlines some funds that offer tax deductions on donations

The Income Tax Act permits deductions against donations made for specific purposes. All donations don't qualify fir deductions under the Income Tax Act. Only donations to specific funds and charitable institutions are exempt. An assessee can claim deductions up to specified amounts. The relevant provisions are contained under Section 80G of the Income Tax.

The deduction is available to any taxpayer - individual, firm, company, or HUF. Further, the assessee may be a resident or non-resident. The donations should be made in cash or through a cheque. Donations made in kind are not eligible for a deduction. The amount should be paid during the relevant previous year.

You can claim a deduction if you donate to:

  • National Defence Fund set up by the Central Government

  • Jawaharlal Nehru Memorial Fund

  • Prime Minister's Drought Relief Fund

  • Prime Minister's National Relief Fund

  • Prime Minister's Armenia Earthquake Relief Fund

  • Africa (Public Contributions - India) Fund

  • National Children's Fund

  • Indira Gandhi Memorial Trust

  • Rajiv Gandhi Foundation

  • National Foundation for Communal Harmony

  • A University or any educational institution of national eminence as may be approved by the prescribed authority

  • Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat

  • Any Zilla Saksharta Samiti constituted in any district, under the chairmanship of the collector of that district, to improve primary education

  • National Blood Transfusion Council or any State Blood Transfusion Council Any fund set up by a State Government to provide medical relief to the needy

  • Army Central Welfare Fund, Indian Naval Benevolent Fund, Air Force Central Welfare Fund

  • The Andhra Pradesh chief Minister's cyclone Relief Fund 1996

  • National Illness Assistance Fund

  • Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund

  • National Sports Fund to be set up by the Central Government

  • National Cultural Fund

  • Fund for Technology Development and Application

  • Any authority constituted for housing, planning, or improvement of cities

  • A contribution towards the renovation of any place notified by the Central Government to be of historic, archaeological or artistic importance

  • The Indian Olympic Association
In some cases, the net qualifying amount eligible for deduction is limited to 10 percent of the adjusted gross total income of the assessee. In case the aggregate of donations exceeds 10 percent of the adjusted gross total income, the amount in excess of 10 percent is not eligible for deduction.

The amount of deduction is specified for different types of donations and the percentage can be either 50 percent of the amount or 100 percent, as specified. According to the IT Department, employees making donations to the Prime Minister's National Relief Fund, Chief Minister's Relief Fund or Lieutenant Governor's Relief Fund through their employers will be allowed deduction under Section 80G of the Income Tax Act on the basis of the certificate issued by the Drawing and Disbursing Officer (DDO) or employer. The CBDT has clarified that in such cases, the funds will not be required to give individual receipts to employees making contributions through employers.

An assessee must attach a proof of payment in order to claim the deduction. Once a deduction is claimed under this section, the assessee cannot claim a deduction under any other provision of the IT Act.

Popular posts from this blog

All about "Derivatives"

What are derivatives? Derivatives are financial instruments, which as the name suggests, derive their value from another asset — called the underlying. What are the typical underlying assets? Any asset, whose price is dynamic, probably has a derivative contract today. The most popular ones being stocks, indices, precious metals, commodities, agro products, currencies, etc. Why were they invented? In an increasingly dynamic world, prices of virtually all assets keep changing, thereby exposing participants to price risks. Hence, derivatives were invented to negate these price fluctuations. For example, a wheat farmer expects to sell his crop at the current price of Rs 10/kg and make profits of Rs 2/kg. But, by the time his crop is ready, the price of wheat may have gone down to Rs 5/kg, making him sell his crop at a loss of Rs 3/kg. In order to avoid this, he may enter into a forward contract, agreeing to sell wheat at Rs 10/ kg, right at the outset. So, even if the price of wheat falls ...

Mutual Fund MIPs can give better returns than Post Office MIS

Post Office MIS vs  Mutual Fund MIPs   Post office Monthly Income Scheme has for long been a favourite with investors who want regular monthly income from their investments. They offer risk free 8.5% returns and are especially preferred by conservative investors, like retirees who need regular monthly income from their investments. However, top performing mutual fund monthly income plans (MIPs) have beaten Post Office Monthly Income Scheme (MIS), in terms of annualized returns over the last 5 years, by investing a small part of the corpus in equities which can give higher returns than fixed income investments. The value proposition of the mutual fund aggressive MIPs is that, the interest from debt investment is supplemented by an additional boost to equity returns. Please see the chart below for five year annualized returns from Post office MIS and top performing mutual fund MIPs, monthly d...

NRI Corner: The process of remittances abroad

The process of remittances abroad, and back, is cumbersome. Here’s how you can wade through without hassles Approach The Right Place Outward remittances or the process of sending money abroad is governed by many regulations. In India, outward remittances are made mainly through banks. At the outset, you need to remember that you just cannot trust any individual or a financial firm with the responsibility of sending your money. Experts recommend that you should always try to choose a bank with an international footprint, which will make your job easier. Choose Mode Of Transfer The next step is to choose the mode of transfer. One option is to get a Foreign Currency Demand Draft ( FCDD ). This draft will be denominated in foreign currency and should be drawn in favour of the recipient/ beneficiary. The beneficiary does not necessarily need to have an account with the same bank. The other option is to send money via wire transfer. Do not be puzzled if the bank official uses the word SWIFT ...

SBI bonds FAQ

  Maximum retail subscription and over – subscription There is a lot of excitement around these bonds, so I won't be surprised if they get over-subscribed on the first day itself. So, I thought Sameer asked a very good question about over-subscription. Here is that discussion. Here are some other questions that you may find useful. Can I trade the SBI bonds on NSE after it lists? Yes, these can be traded after listing. Where can I get the application forms, and can I buy the bonds online? You can get the application from notified branches, and then fill it up there and submit it. To the best of my knowledge, there is no way to invest in them online, but if anyone knows otherwise then please leave a message, and let us know. Can NRIs apply for these bonds? NRIs can't apply for these bonds as they fall under one of the ineligible categories. Can you take a loan by keeping the SBI bonds as security? The terms of the issue in the prospectus state that the bank shall no...

IIFL NCDs

Buy Gold Mutual Funds Invest Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Call 0 94 8300 8300 (India) IIFL NCDs IIF's six-year unsecured NCD 2012 Risk-wary investors should stay away from this issue, and even, risk-taking ones should think twice It is a public issue of unsecured redeemable non-convertible debentures ( NCDs ) by India Infoline Finance ( IIF ), an unlisted company, which is a 98.9 per cent subsidiary of India Infoline, a listed company. The issue seeks to raise Rs 250 crore with an option to retain over-subscription up to Rs 250 crore taking the total potential issue amount to Rs 500 crore. It will be open for public subscription from September 5 to September 18 with a minimum application size of Rs 5,000 in the form of five NCDs of face value Rs 1,000, TENURE & RATES: IIF will redeem the NCDs at the end of six years, and investors wanting out before six years will be able to sell the...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now