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

Tata Mutual Fund

Being a part of the Tata group, the fund has the backing of a very trusted brand name with strong retail connect. While the current CEO has done an excellent job in leveraging the Tata brand name to AMC's advantage, it is ironic that this was just not capitalised on at the start. Incorporated in 1995, Tata Mutual Fund remained an 'also-ran' fund house for around eight years. Till March 2003, it had a little over Rs 1,000 crore in assets and 19 AMCs were ahead of it. But soon after that the equation changed. It was the fastest growing fund house in 2004 and 2005. During these two years, it aggressively launched six equity funds, two debt funds and one MIP. The fund house as of now stands at No. 8 in terms of asset size. This fund house has a lot to offer by way of choice. And, it also has a number of well performing schemes. Tata Pure Equity, Tata Equity PE and Tata Infrastructure are all good funds. It also has quite a few good debt funds. The funds of Tata AMC are known to...

UTI Mutual Fund

Even though only a few of UTI’s funds are great performers, this public sector fund house has many advantages that its rivals do not. It has a huge base of retail equity investors and a vast distribution network. As a business, it looks stronger than ever, especially in the aftermath of credit crunch. UTI is, by a large margin, the most profitable fund company in the country. This is not surprising, since managing equity funds is more profitable than debt. Its conservative approach and stable parentage is likely to make it look more attractive to investors in times to come. UTI’s big problem is the dragging performance that many of its equity funds suffer from. In recent times, the management has made a concerted effort to improve performance. However, these moves have coincided with a disastrous phase in the stock markets and that has made it impossible to judge whether the overhaul will eventually be a success. UTI’s top performers are a few index funds, some hybrid funds and its inf...

Salary planning Article

1. The salary (basic + DA) should be low. The rest should come by way of such allowances on which the employer pays FBT and you don't pay any tax thereon. 2. Interest paid on housing loan is deductible u/s 24 up to Rs 1.5 lakh (Rs 150,000) on self-occupied property and without any limit on a commercial or rented house. 3. The repayment of housing loan from specified sources is also deductible irrespective of whether the house is self-occupied or given on rent within the overall ceiling of Rs 1 lakh of Sec. 80C. 4. Where the accommodation provided to the employee is taken on lease by the employer, the perk value is the actual amount of lease rental or 20 per cent of the salary, whichever is lower. Understandably, if the house belongs to a family member who is at a low or nil tax zone the family benefits. Yes, the maximum benefit accrues when the rent is over 20 per cent of the salary. 5. A chauffeur driven motor car provided by the employer has no perk value. True, the company would...

8 Investing Strategy

The stock market ‘meltdown’ witnessed since the start of 2005 (notwithstanding the recent marginal recovery) has once again brought to the forefront an inherent weakness existent in our markets. This is the fact that FIIs, indisputably and almost entirely, dominate the Indian stock market sentiments and consequently the market movements. In this article, we make an attempt to list down a few points that would aid an investor in mitigating the risks and curtailing the losses during times of volatility as large investors (read FIIs) enter and exit stocks. Read on Manage greed/fear: This is an important point, which every investor must keep in mind owing to its great influencing ability in equity investment decisions. This point simply means that in a bull run - control the greed factor, which could entice you, the investor, to compromise with your investment principles. By this we mean that while an investor could get lured into investing in penny and small-cap stocks owing to their eye-...

Debt Funds - Check The Expiry Date

This time we give you an insight into something that most debt fund investors would be unaware of, the Average Portfolio Maturity. As we all know, debt funds invest in bonds and securities. These instruments mature over a certain period of time, which is called maturity. The maturity is the length of time till the principal amount is returned to the security-holder or bond-holder. A debt fund invests in a number of such instruments and each of these instruments would be having different maturity times. Hence, the fund calculates a weighted average maturity, which would give a fair idea of the fund's maturity period. For example, if a fund owns three bonds of 2-year (Rs 30,000), 3-year (Rs 10,000) and 5-year (Rs 20,000) maturities, its weighted average maturity would be 3.17 years. What is the big deal about average maturity then, you may ask. Well, knowing a fund's average maturity is important because it tells you how sensitive a fund is to the change in interest rates. It is ...
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