Tax Deduction Under Section 80G of the Income Tax Act

Tax Deduction Under Section 80G of the Income Tax Act: A Comprehensive Guide

Tax deductions play a crucial role in reducing an individual's taxable income, providing financial relief and encouraging philanthropy. One such significant provision is Section 80G of the Income Tax Act, which allows taxpayers to claim deductions for donations made to specified charitable institutions and funds. Let's delve into the details of Section 80G and how it can benefit you while contributing to noble causes.

Understanding Section 80G:

Eligibility Criteria:

To avail of deductions under Section 80G, it's essential to ensure the following:

1. Registered Institutions:
   • Donations must be made to institutions and funds registered under Section 80G of the Income Tax Act.
   • Verify the registration status of the organization to ensure it qualifies for deductions.
2. Mode of Donation:
   • Deductions are applicable only for donations made through cheque, draft, or other banking channels.
   • Cash donations exceeding Rs 2,000 are not eligible for deductions.
3. Donation Receipts:
   • Obtain a valid donation receipt from the charitable institution, providing details of the donation and the institution's registration.

Types of Donations Eligible for Deduction:

• Donations to certain funds and charitable institutions, including the Prime Minister's National Relief Fund, are eligible for deductions.
• Contributions to recognized religious institutions also qualify for deductions under certain conditions.

Quantum of Deduction:

• The amount eligible for deduction varies, with different sections specifying the percentage of the donation that can be claimed.
• Ensure to check the specific provisions of Section 80G for the applicable rates.

Provisions for 100% Deduction:

• Certain donations, like the National Defence Fund, enjoy a 100% deduction without any qualifying limit.
• Verify the specific provisions for complete deductions.

How to Claim Deductions Under Section 80G:

1. Check the Institution's Registration:
   • Ensure that the charitable institution is registered under Section 80G by verifying its registration certificate.
2. Provide PAN Details:
   • While making donations, provide your PAN details to the charitable institution, as it is a mandatory requirement for claiming deductions.
3. Keep Donation Receipts:
   • Preserve the donation receipts issued by the charitable institution, as they serve as crucial evidence for claiming deductions.
4. Mention Donation Details in Tax Return:
   • While filing your income tax return, provide details of the donation amount and the institution's name to claim deductions under Section 80G.

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In conclusion, Section 80G of the Income Tax Act offers taxpayers an opportunity to contribute to charitable causes while enjoying deductions on their taxable income. As you embark on your philanthropic journey, leverage Propty to find the perfect home that complements your aspirations.