Everything You Need to Know About Donation Tax Exemption

By: Zahabiya, Sonali

Published On: January 03, 2022

Income tax is paid by individuals as per a percentage of their annual income based on the tax bracket within which their annual income falls. Section 80 of the income tax act provides taxpayers with a list of tax deductions that they can avail to lower their taxable income and reduce their tax burden. The government provides donations tax exemptions to give impetus to certain social and economic activities with donations to charity organizations being tax-deductible under Section 80G of the Indian Income Tax Act.

 



According to the CAF (Charitable Aid Foundation) World Giving Index 2021, India ranks in the top 20 most charitable countries in the world, coming in at the 14th position, which can act as a testament to the country's inherent philanthropic disposition. 


If you are someone who wants to donate to a good cause while simultaneously reaping the financial benefits of charitable giving, it is important to first grasp the tax requirements.




What is Section 80G?


Section 80G of the Income Tax Act provides specific rules and guidelines for the scope of tax deductions on charitable contributions. One can claim a 50% or even 100% deduction for the amount donated with or without an upper limit depending on the entity one is donating to. Therefore, it becomes essential that you choose with care the charity you want to donate, in order to avail the maximum benefit. 


Types of Deduction Under 80G


  • 100% tax deduction without any limit- the donor can claim 100% of the donation without any limitation while donating to charities like National Defence Fund, etc.

  • 100% tax deduction with a limit- the donor can claim 100% of the donation with a limit of 10% of Adjusted Gross Total Income while donating to any central or local authority for the promotion of family planning.

  • 50% tax deduction without any limit- the donor can claim 50% of the donation without any limitation while donating to charities like Jawahar Lal Nehru Memorial Fund, etc.

  • 50% tax deduction with a limit- the donor can claim 50% of the donation with a limit of 10% of Adjusted Gross Total Income while donating to the central or local authority for any cause other than the promotion of family planning.


Section 80G Deduction - Terms and Conditions


Certain restrictions and circumstances must be completed in order to obtain Section 80G tax deductions. Some of the most essential reasons are:


  • A minimum of ₹500 needs to be donated to claim the deduction.


  • Tax deductions cannot be claimed for cash contributions of more than ₹2,000. These modifications were implemented as part of the 2017 budget. Transactions above ₹2,000 need to be made in any other mode except cash.


  • Contributions in kind (goods or services other than money) are not tax-deductible under Section 80G of the Income Tax Act.


  • Contributions given to trusts registered outside of India are not tax-deductible.


  • Even NRI citizens can avail of these tax deduction benefits


As not all organisations are recognised as charitable trusts, not all of your donations may be tax-deductible. It is critical to determine whether the organisation to which you are donating can offer you a certificate under Section 80G, after which you can claim 50-100 per cent deductions on your donations.



Crowdfunding and donation tax exemption

It has never been easier to help your favourite charity in the age of crowdfunding. Technology has altered how individuals all across the world help each other. Giving a digital helping hand to those in need is now simple, and locating the best organisations to donate to takes no time at all. 

The best crowdfunding platforms have done an outstanding job of making the process of donating to fundraisers quick and easy for donors. Crowdfunding platforms like ImpactGuru offer generous individuals to receive tax benefits on donations made to registered charity fundraisers.


Give back to your community through crowdfunding

20+ lakh people have donated on ImpactGuru to support the causes they are passionate about. This helps like-minded individuals come together on the crowdfunding platform to benefit the community while reducing their tax liabilities. One such life, saved by receiving the right help at the right time is of 7-months old Mukunda Priya, who was suffering from a heart condition and bronchopneumonia. This little angel was lucky enough to have the support of so many kind people that her fundraiser went on to raise ₹7 lakh for her surgery. 


There are so many people like this little one who are waiting for your help. Find fundraisers eligible for tax exemption for altruistic individuals like you on ImpactGuru, and make a donation to a fundraiser that resonates with you the most. Visit: https://www.impactguru.com/fundraisers




 


To know more about crowdfunding and tax exemptions, click here -

Crowdfunding In India Is Safe & Legal. Find Out How.