Tax Advantages for a Good Cause: Making the Most of 80G Donations to Promote Charity in India

Giving a bit of yourself for a good cause always feels good. You can either volunteer your services or help through a donation to charity. There are many charities and NGOs doing stellar work on the ground – working with or alongside the government to plug the gaps. 

To encourage donations, the Government of India introduced tax saving on charitable donations where people can optimise the amount payable as tax and at the same time provide financial support to a charity working for a good cause. Under the Indian Income Tax Act, 1961, 80G donation for NGO in India qualifies for a 50-100% reduction in the final amount payable as tax. 

To put it simply, if you have donate Rs 10,000 to an NGO which is registered for a 50% tax deduction, you can claim a deduction of Rs 5000 on the total taxable income. 

What are the Advantages? 

Donation to charity in India has double advantages. By supporting a charity working for a cause in India we provide the charity the funds they need to undertake work that creates an impact on the ground. This gives you the opportunity to contribute to the larger development of society and be socially responsible. With the donations received, a charity is able to plan and execute it’s programs in a more efficient manner leading to a larger impact. 

The other benefit of donating is that one can earn a tax saving on charitable donations. Under section 80 G of the Indian Income Tax Act, 1961, one can earn a saving of 50-100% on the amount donated, depending on the type of charity you donate to. By providing these tax benefits to Indian residents, the government hopes to encourage a larger number of people to donate to charitable causes. 

Making the Most of 80G donation for NGO in India

It is important to note that not all donations are eligible for tax exemptions. Only donations made to registered and recognised institutions are eligible for donations. To claim an 80 G tax exemption, the donation must be in the form of money and not goods and services. The deduction can be made for cash, bank transfers. Cash donation in excess if Rs 2000 is it eligible for an 80 G tax exemption. 

For claiming a tax deduction, you must ensure that you have received a receipt from the charity. The receipt must mention your name and the exact amount donated. It should also contain the address of the charity to which the donation has been made and it’s registration number. 

Your tax liability is based on your net taxable income. This in turn is derived after removing all deductions that you are eligible for from your gross income. 

The amount of tax saved is dependent on the type pf charity donated to. Donations to some charities are eligible for a100 per cent tax deduction. These include:

• The Prime Ministers National Relief Fund 
• National Defence Fund 
• National Foundation for Communal Harmony

 For other registered charities, you can claim a deduction of 50%. 

Documents Required for claiming a tax deduction: 

 The following documents are required for claiming a tax refund: 

• A stamped receipt from the charity the donation has been made to. 
• The registration number of the charity provided by the Income Tax Department should be mentioned on the receipt.
• A copy of the 80G certificate. 

Both individuals and companies are eligible for these tax deductions. It is important to keep in mind that the total deduction claimed under Section 80G cannot exceed 10% of the taxpayer’s gross total income.

Charitable donations thus are a great way of supporting a good cause while reducing your tax liability. This is an important part of financial planning for both individuals and companies. This opens avenues for a charity to generate funds to undertake meaningful work that is helping change the lives of the not so privileged people or making an impact on the environment.  For an individual like you, it opens up opportunities to contribute towards the greater good by supporting a cause that you resonate with and make a difference. It also offers an easy way to plan your finances and reduce your tax liability.