Steps for Making Charitable Donations

Friday 16 February 2018
If you desire that India's children, irrespective of their background, find a life of health, happiness and purpose, you must donate to NGO fundraising. For this, you must identify an organisation engaged in credible charitable work, and then ensure that your hard earned money generates lasting value over time. As a small reward for your kindness, the Indian government grants you a substantial donation tax rebate (via Section 80G of the Income Tax Act) for donations to charitable organisations. When considering to make a donation to charity, you must keep in mind that you are now participating in a larger societal change. 

You will be improving community resources providing support for difficult conditions.

1. Donate to a trusted NGO

When considering an NGO to donate your hard earned money to, you must find one eligible for donation tax return when you donate to charity. The NGO must therefore be formally registered (under Societies Registration Act 1860 or Section 25 of the Companies Act 1956).

It must comply with the following:

i. All sources of NGO income must not be exempted (including business income)

ii. NGO objectives must not spend on non-humanitarian causes

iii. No discrimination in spending on religious communities or caste

iv. Transparent accounts

2. Receipt and 80G exemption

Income Tax Returns are calculated on the basis of on income source and total earnings. You are legally permitted to restructure your wealth to be taxed less. Indian residents, Non-Resident Indians, a Hindu Undivided Family, and companies are eligible for rebate via charitable donations to institutions, which are eligible to provide exemption under Section 80G.

The paperwork needed to acknowledge your donations to an NGO that provides you tax exemption while filing your Income Tax Returns.

Documentation you will need:

 i. Stamped receipt that contains the citing name, address and PAN of trust/organisation. The receipt will also need your name and the amount donated.

ii . Form 58 for organisations that provide 100% deduction while filing ITR

iii. Registration number and validity dates

iv. 80-G certificate

3. Claim deduction

When claiming income tax deduction, you will need to inform your office Accounts department during tax filing season. You must include the mention of tax rebate for donations made to a charitable organisation. Indian employers are by law obliged to include tax exemption for an 80G-permitted list of charities, trusts and organisations. Provision for this is not included in Form 16, but must be claimed separately. It works at par with other tax saving financial instruments by reducing your total tax liability.

4. Donate to NGO Save the Children

Save The Children is known for transparency in how it uses its donation spending. The NGO spends heavily on its many programs to fight child exploitation across India. Tens of thousands of donors contribute to the NGO's fundraising programs and therefore are united in defending child rights. Its donors give money towards dedicated cause-based programs, and also through monthly commitments to allow the NGO to continue child rights work.

Conclusion

When you donate to NGO fundraising, do not be concerned foremost about tax benefits, but the 'karma', or personal goodwill, as well as satisfaction for giving back to the society. The end-of-year tax rebate is therefore just a small gift to acknowledge your philanthropic donations. Instead, focus on how your donation can reach India’s poor and needy children, who face challenges in every stage of their lives. When working towards a significant social cause, every rupee has the potential to make a difference. Considering that an average donation is the equivalent of a month's coffee budget for India's salaried professional, giving back is easy.