Get Charitable Contribution Tax Deduction in Three Steps

Wednesday 30 November 2016


Every year, you’re charged income tax based on your source of income and total earnings. Financial advisors suggest restructuring your wealth and assets to be taxed less when you are filing your Income Tax Returns (ITR), and this can be done in minutes from your laptop. Section 80G permits substantial tax rebates for people who donate to NGO fundraising. Indian residents, Non-Resident Indians, a Hindu Undivided Family, and companies are eligible for this rebate.

Here is how you can ensure you get the tax deduction for a charitable contribution this financial year in 3 easy steps.

1. Donate to a trusted and eligible NGO (not in cash)

Identify a trusted NGO which is eligible for tax deductions when you donate to charity. The NGO must be formally registered with the Societies Registration Act 1860, Section 25 of the Companies Act 1956 or a corresponding law.

Additionally:

i. The NGO must not have a source of income not exempted (including business income).

ii. The NGO's objectives must not specify spendings on goals that don’t support charities or humanitarian causes.

Iii. The NGO must not discriminate spendings on religious communities or caste.

iv. Transparent accounts of receipts & expenditures must be maintained.

Donate online, directly on the NGO’s website - it is the fastest and the most transparent form of spending and gives you access to instant online records via your debit/credit card receipts, as well as email receipts to confirm the transaction.

2. Get receipt and 80G exemption certificate

As mentioned above, access to a receipt is important. This and other documentation is essential for filing a tax deduction:

i. A stamped receipt: The receipt must mention the name, address and PAN of the trust/organization, along with your name, and the amount you have donated.

ii . Form 58: In case you have made a donation to an organisation/initiative that provides you 100% deduction, you need a Form 58 as a proof while claiming charitable donations in your ITR.

iii. The organization’s Registration number with validity dates

iii. An 80-G Certificate.

3. Claim deduction while filing returns

Give an advance notice to your office accounts team during the tax filing season about investment details. All employers across India are legally permitted to offer tax exemption for 80G-permitted list of charities, trusts and organisations. This investment may not be found in Form 16, but can be claimed separately at the time of filing returns. It qualifies to increase the returns you can then claim, at par with the benefits of other tax-saving financial instruments.

Conclusion

Many might consider donating money to reduce their tax burden simply by giving away money, and it may sound counter-intuitive. However, helping an NGO like Save the Children is an investment not only for the exploited children in your neighbourhood or city but also a boon for the future of children everywhere.  Today’s happy & healthy children become tomorrow's productive adults. Save The Children is known for transparency in donation spending, and has spent a substantial number of donations on programmes to fight child exploitation across India. The NGO is supported by over 1 lakh donors, who are proud to defend child rights with their contributions.