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.
Labels:

Popular posts from this blog

Mutual Fund Review: Religare Tax Plan

Tax Plan is one of the better performing schemes from Religare Asset Management. Existing investors can redeem their investment after three years. But given the scheme's performance, they can continue to stay invested   Given the mandated lock-in period of three years, tax saving schemes give the fund manager the leeway to invest in ideas that may take time to nurture. Religare Tax Plan's investment ideas revolve around 'High Growth', which the fund manager has aimed to achieve by digging out promising stories/businesses in the mid-cap segment. Within the space, consumer staples has been the centre of attention for the last couple of years and can be seen as one of the key reasons for the scheme's outperformance as compared to the broader market. It has, however, tweaked its focus and reduced exposure in midcaps as they were commanding a high premium. The strategy seems to have worked as it returned a 22% gain last year. Religare Tax Plan has outperformed BSE 100...
Read more

Mutual Fund Review: L&T MIP

        This fund won't deliver chart-topping returns. However, over the long run it will not disappoint and end up beating the category average The fund has seen numerous changes at the helm. When Katare took over in October 2007, he made dramatic alterations to the portfolio. On the equity side, he increased the number of stocks to 11 (November) from 2 (September). On the debt side, he added Certificates of Deposit (CDs), while earlier Treasury Bills (T-Bills) and cash accounted for 88 per cent (September 2007) of the portfolio. In November 2007 he exited T-Bills for good. The results impressed. In the last quarter of 2007, it delivered 12.83 per cent (category average: 6.12%). In 2008, the first quarter performance was nothing short of impressive, a return of 9.93 per cent (category average: -3.97%). While other players increased their portfolio maturity, Katare maintained a low maturity profile. While the average maturity of the category was 2.81 years that quarter, th...
Read more

Mutual Funds: Past Performance is not just everything

Many a times your agent / distributor / relationship manager tries to push you some mutual fund schemes by enticing you with a typical sales pitch…"Sir, this scheme has generated 20% returns in the past one year." And this sales pitch often gets louder when the market conditions have been favourable. Some of the agents / distributors / relationship managers have another unique way of luring you. They say, "Sir / madam this scheme has been awarded the best scheme award in the past by a leading business channel"... And hearing all these sales talks you investors very often get attracted and sign a cheque in favour of the respective scheme.   But please ask yourself do you hear these sales talks when the capital markets turn turbulent? Why is it so that your agent / distributor / relationship manager avoids talking to you during turbulent times of the capital markets and doesn't boast about returns generated by the respective funds or awards being conferred on t...
Read more

Reconfigure investments to reap benefits in DTC

    Investing for tax benefits under the new Direct Taxes Code ( DTC ) will be different in several ways from what taxpayers are familiar with right now. This will require some reconfiguration in the nature of investments for the investor and they need to be ready to tackle the changes that will come about once the new DTC is implemented from financial year 2012-13.One area of interest for most taxpayers is the manner in which they can extract the maximum tax benefit. Here is a look at the situation and also how it changes from the existing position. Basic deduction: At present, there is a deduction of Rs 1 lakh that is available for an individual when they make investments under specified areas such as provident fund, public provident fund, national savings certificates, equity linked savings scheme and insurance premium, among others. This benefit is available under Section 80C of the Income Tax Act. This has been replaced by a new Section 68 under the DTC where there is a deduct...
Read more

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 ...
Read more
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