In a bid to encourage the social contributions of the citizens, the government gives tax exemption for philanthropists who give away monetary wealth to the needy.
There are many government and non-government organizations who work for the upliftment of the underprivileged, making contributions to them will get you tax exemption under section 80 G. The claim can be made over the money which is donated.
Any individual or business firms, regardless of their source of income can make contributions and claim an exemption.
The condition for making a claim under section 80 G
In order to make a claim, the donor has to provide a proof in terms of a receipt. Amy materialistic donation such as food and medicine provided cannot be stated for a claim. A stamped receipt by the trust alone is considered for exemption which has to be submitted while filing income tax returns.
The receipt provided should have the following details
- The name of the trust
- Address of the trust
- Name of the donor
- Amount donated (mentioned in words and figures)
- Registration number of the trust as provided by the income tax department
Limit for deduction under section 80 G
The limit for deduction over the amount donated depends upon the type of institution to which donation is made. In certain cases, 100 percent deduction is possible while in certain institutions only 50 percent deduction is applicable.
Donations to the following institutions are applicable for 100 percent deductions.
- National defense fund set by the central government
- National Foundation for Communal Harmony
- Prime Minister’s Armenia Earth Quake relief fund
- Prime Minister’s National Relief Fund
- Zila Saksharta set by any district
- National Blood Transfusion Council
- National illness assistance fund
- National cultural fund
- Fund for technology development and application development
- Andhra Pradesh Chief Minister’s cyclone relief fund
- Any fund set by the state government to provide a medical fund for the poor.
- National sports fund set by the central government
- Chief Minister’s relief fund or the Lieutenant governor’s relief fund
- Army central welfare fund or Air Force central welfare fund or Indian Naval Benevolent fund
- Maharashtra State government’s earthquake relief fund
Donations eligible for 50 percent deduction
- Jawaharlal Nehru Memorial fund
- Prime Minister’s Drought Relief fund
- National Children’s fund
- Indira Gandhi Memorial fund
- Rajiv Gandhi Foundation
Subsections under section 80 G
Section 80GGA: Under the section, any donations made to scientific or research development are applicable for 100 percent tax deduction provided it’s given by taxpayers with no business income.
Section 80 GGC: 100 percent tax deduction towards donation made to a political party or an electoral trust.
Trust claiming tax exemption under section 10
Under section trusts and institutions dedicated to working towards scientific and rural areas are eligible for tax exemption
Under section 11
Under section 11 income derived from property owned by the trust will not be included in total income.
Requirements to obtain 80 G
NGO should not have any income which does not come under the exception. If the organization has any income through business the records for the same have to be maintained separately.
They should maintain receipts and bills of all expenditures.
Trustees and the governing members should not draw any unaccounted money for their purposes through the funds.
The organization should be properly registered under the societies registration act 1860 Indian trusts act 1882.
The organization should not work for the benefit of any particular caste or religion
The funds should not be spent for any other purpose other than the charitable objectives mentioned in the trust deed.
How to register for 80 G certificate?
Here are the following steps one has to follow while registering for the certificate:
- Dully filled 10 G registration form
- Registration certificate and trust deed
- NOC from the landlord in case the property does not belong to the trustee
- Copy of PAN card of the organization
- Bills and receipts such as those of house rent or water bill.
- Proof of welfare activities carried out since the inception of the organization
There are trusts which are not registered in accordance with the government rules. Donations made to these entities are not eligible for tax exemptions.