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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.

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