How to assert tax deductions in your donations to charity

Section 80G of the Income Tax Act permits tax deduction on donations made to eligible charitable organizations. Donations made in type and in money above ₹2,000 don’t qualify for tax breaks.

“All NGOs or charitable establishments don’t robotically qualify to supply their donors with a deduction u/s 80G both. Only these organizations accepted by the Commissioner of Income Tax (Exemptions) for receipt of donations and issuance of 80G certificates can achieve this,” said Suresh Surana, founder, RSM India.

The list of eligible organizations is available on the income tax website. For taxpayers who donate through crowdfunding sites such as Ketto and Milaap, the eligibility of the organizations is mentioned on the campaign page. “Individuals who raise funds for personal causes or for family or friends don’t qualify for 80G deduction. This is peer-to-peer crowdfunding where the recipient is an individual and donors in this case don’t get tax breaks,” mentioned Varun Sheth, co-founder and CEO, Ketto.

However, these platforms don’t assume the duty of issuing 80G certificates or Form 10BE (beginning within the present evaluation yr).

Beginning monetary yr 2021, charitable organizations need to declare particulars of all donations obtained in a yr to the tax division by Form 10BD. It’s solely after they declare the assertion of donation and difficulty Form 10BE to donors that the latter can avail tax deduction on donations. The due date to file Form 10BD is 31 May of the next monetary yr. For occasion, due date for the final monetary yr 2020-21 was 31 May 2022.

“Form 10BE is critical for the donors now to avail part 80G deduction. Hence, if the donee fails to generate this in time or has incorrect or no details about its donors, the donor won’t be able to avail the tax profit,” Maneet Pal Singh, accomplice, I.P. Pasricha & Co.

The eligible deduction underneath 80G will probably be prefilled in your Income Tax Return (ITR), as per Archit Gupta, founder, Clear. If the knowledge shouldn’t be there within the ITR type, you need to contact the group to test whether or not it has filed Form 10BD throughout the due date.

Some organizations enable 50% or whole deduction, as relevant, with no qualifying restrict, whereas others include a qualifying restrict of 10% of the adjusted gross whole revenue. This means all donations made to institutes falling within the latter class shouldn’t exceed 10% of the adjusted gross whole revenue.

Subscribe to Mint Newsletters

* Enter a legitimate e-mail

* Thank you for subscribing to our e-newsletter.

First article