One of the ways is to make a charitable donation under section 80G of the Income Tax Act.
As we enter the month of July, tax filing season is in full swing, and individuals are actively seeking ways to save money. While there are limited options for tax exemptions for those who have chosen or are considering the new tax system, individuals who prefer the old tax system still have opportunities to save on taxes. One such avenue is making charitable donations under Section 80G of the Income Tax Act, which allows taxpayers to claim deductions for contributions made to certified charitable organisations.
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It’s important to note that the exemption can only be claimed on donations made to institutions authorised by the Commissioner of Income Tax. These organisations must have the necessary permissions to accept donations and issue 80G certifications.
So, what exactly is Section 80G?
Section 80G enables individuals, corporations, and partnerships to claim income tax deductions for contributions made to specific relief funds and charitable institutions. It’s worth mentioning that those who have opted for the new tax regime are not eligible for this deduction. Donations made by cheque, draft, or cash are eligible for the deduction, while other forms of gifts such as food, materials, clothing, or medicines do not qualify under Section 80G. The deduction under this section can be either 50% or 100% of the donation amount.
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How to claim the deduction?
To claim a deduction under Section 80G, taxpayers need to fill out ‘Schedule 80G’ on the Income Tax Return (ITR) form, providing details of their donation. This schedule consists of four tables (A, B, C, and D), as explained by Naveen Wadhwa, Deputy General Manager of Taxmann. It is crucial to ensure that all information regarding the contribution is accurately provided.
What information needs to be provided?
When filling out ‘Schedule 80G’, the following information should be included:
Name and address of the recipient organization
Permanent Account Number (PAN) of the recipient
The total amount of the donation
Breakdown of the donation amount paid in cash and through other means, specifying the deductible amount.
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By adhering to the guidelines and furnishing the necessary information, individuals can avail themselves of tax deductions under Section 80G while supporting charitable causes. This serves as an excellent opportunity to contribute to society and optimize tax planning strategies during the tax filing season.
