Tax Exemption on Donations under Section 80G

Charity is about voluntarily helping those in need, whether through monetary donations or other forms of support. It’s a way to give back to society, bringing joy and fulfillment while also offering tax benefits. Various NGOs and non-profits in India work tirelessly to conduct charitable activities, raising funds and providing essential support to those who need it most. These organizations play a vital role in advancing the government’s economic development and social welfare objectives. Their localized approach helps identify and reach out to the needy, ensuring timely support. Recognizing their impact, the Indian government provides tax incentives and exemptions, notably under Section 80G of the Income Tax Act.

WHAT IS TAX EXMPTION?

Tax exemption is the reduction or elimination of a mandatory payment obligation imposed by law on individuals, properties, or income. This status can provide relief from various taxes, offer reduced rates, or tax only a portion of specific items. Examples include tax exemptions for charitable donations, NGOs, and veterans. Organizations seeking tax exemption must register under Section 12A of the Income Tax Act, but this doesn’t automatically qualify them for 80G deductions. Only charitable trusts and NGOs that meet specific criteria are eligible for 80G tax benefits, excluding religious institutions

Exemptions on Donation Under Section 80G of the Income Tax Act.

Section 80G of the Income Tax Act, 1961, provides tax exemptions to donors who contribute to charitable organizations like Unique Samaj Seva Sansthan. When you donate to our NGO, you’re eligible for tax deductions on your contribution. We’ll provide you with the necessary 80G receipts and certificates, which you can use to claim tax benefits. To qualify for these benefits, our organization is registered under Section 12A and approved under Section 80G. Note that tax exemptions are subject to government regulations and are only applicable to charitable purposes Non Profit Orgnization. By supporting our causes, you’re not only making a difference but also availing tax benefits.

While the government permits tax deductions for donations to charitable organizations and relief funds, tax exemption benefits under Section 80G may not apply universally. Taxpayers, including individuals, firms, companies, HUFs, and others, can claim tax benefits on donations if they have a taxable income in India. This applies to both Indian residents and NRIs with an Indian passport. However, the tax benefit is contingent on the donor’s taxable income and the NGO’s 80G registration.

Further, to claim an exemption under the Income Tax Act, a donor must satisfy the following criteria as well:

  • To claim tax benefits, donations must be made to NGOs registered under Section 12A and approved under Section 80G.
  • A valid 80G receipt and certificate are required
  • For donations exceeding Rs 2,000, cash payments are not eligible for tax benefits; alternative payment modes like cheque, online transfer, or DD must be used. 
  • Ensure you obtain the necessary documentation to claim your tax deduction.
  • There are also no NGO tax benefits donations that are made in kind.

Eligibility for Claiming an Income Tax Exemption Under Section 80G.

All Indian taxpayers, including individuals, Hindu Undivided Families, and companies, can claim tax deductions under Section 80G for donations to eligible charitable organizations. Non-Resident Indians (NRIs) with an Indian passport can also benefit, provided they donate to registered and valid charities. To qualify, the NGO must be registered under Section 12A and hold a valid 80G certificate. Donations to religious trusts or funds are not eligible. It’s essential for donors to verify the charity’s credentials before making a donation.

Documentation Required for Claiming a Section 80G Deduction.

To claim a Section 80G deduction, you’ll need:

  • Duly stamped receipt from the charity organization, including: Donor’s name,Trust’s name, address, and PAN  Donation amount, Trust’s /Ngo registration number
  • 80G certificate from the charity organization.
  • Valid registration number of the trust/Ngo, ensuring validity on the donation date.
  • Form 58: This is an essential document for donations that are eligible for a 100% deduction.
  • Every eligible trust is provided with a registration number by the Income Tax Department, and it is important for the donor to ensure that this number is mentioned on the receipt of their donation as well. Additionally, the registration number should have been valid on the date on which the donation was made.