Giving to charity is a great deed. Not only does God acknowledge this, but also the income tax division. Therefore, giving to charity has benefits beyond just good karma. A tax deduction is available under Section 80G of the Income Tax Act for donations given to specific charitable organizations listed in the Income Tax Act of 1961.
What Are Donations To Charities?
Under Section 80G of the Income Tax Act, donations to specific relief funds and charitable organizations may be deducted from income. However, section 80G does not permit deductions for all donations. Only contributions to specified funds are eligible for a deduction. Any taxpayer—an individual, a company, a firm, or another person—may claim this deduction.
The only types of donations that qualify for a tax deduction under Section 80G are made in cash or by check. Cash donations, however, are not eligible for a tax deduction over Rs. 10,000.
There is no tax deduction available for gifts that are given in kind.
Any cash donations over Rs 2000 will no longer be eligible for a deduction as of FY 2017–18. Therefore, to qualify as a deduction under Section 80G, donations over Rs 2000 must be given via a method other than cash.
Who can make a payment?
Not every donation is eligible for a full tax deduction. Some are limited to 50% of the contribution, while others are eligible for the same deduction of up to 10% of the taxpayer’s adjusted gross income. Section 80G of the Income Tax Act contains the required list of such institutions.