How donations can assist people in saving tax

Wednesday 25 January 2017

As tax season comes around, people are consulting their accountants to restructure their wealth and investment portfolio to maximise their income tax returns. While your income, from employment and passive revenue sources, can be taxed, efficiently channelizing your wealth can help you reduce the net income you are taxed. You can generate a sizeable amount of income tax returns through this exercise, which can be done in 1-2 hours.

Here is how you can use your donation to a trusted NGO to save tax.
 
Why support an NGO with your donation
Your donation to a trusted NGO like Save the Children will help fund well-researched and streamlined programs created to bring long-term change to communities.  These programs use best practices to fight hunger, poverty, illiteracy and child exploitation. In times of disaster, your donation will help create a never-ending supply chain of goods to regions where aid is needed.  And, your donation to a registered NGO also earns you tax exemption, which means you do get some kind of reward for your service to others. This deduction can be availed by Indian residents, Non-Resident Indians, Hindu Undivided Family, or companies.
 
The value of online transactions
Online transactions are not only swiftly and secure, but also help you instantly donate small amounts that accrue over time. By the time March (end of financial year) comes around, you will have a number of tax certificates that you can encash for a sizeable return. Many credit card providers also provide points for regular usage, which can be used towards shopping, further incentivising your online donations.
 
Type and amount of donation
A Rs. 10,000 maximum limit has been established for claiming a tax deduction for 35 AC or 80G certificates. You will receive a tax certificate that can be attached to your income tax application form. However, only cash, cheque, and online donations are considered valid for a tax donation. Other forms of donations, including food, medicine, may be useful but are not applicable for tax purposes.
 
Documentation required to file for tax deduction
i. Stamped Receipt: A receipt which mentions the name, address and PAN of the trust. It also must cite your name and the amount you have donated.
ii . Form 58: For 100% deduction for charitable donations. Form 58 should also be attached
The organisation's Registration number: A valid registration number, with validity dates, must be mentioned on the receipt
iii. 80-G Certificate: Attach a copy of the 80-G Certificate to the receipt to complete your paperwork.
 
Subsections to Section 80G, ITA:
Tax deductions don't only qualify with reference to Section 80G. Keep in mind sub-sections, which include:
i. Section 80GGA - 100% tax deduction: Donations made to entities engaged in scientific research and rural development
ii. Section 80GGC: 100% tax deduction: Donations made towards a political party registered under Section 29A, Representation of the People Act, 1951, or an electoral trust.
 
Conclusion
Save The Children spends extensively on programmes to fight child exploitation across India. The NGO is supported by lakhs of donors, as well as corporate partners and celebrity supporters, who further its cause in India and across the world. Donating money to an NGO is as valuable an investment as one into traditional financial instruments. Your hard earned money will directly help provide education and health for India's future, its children. The NGO's unparalleled reach and a variety of social programs ensure a great return on investment for your contributions.