Tax Benefits of Donating for a Good Cause Under Section 80G of Income Tax Act

 Charitable giving is an important part of society. It is the social responsibility of an individual who is in a position to donate and make a difference in the lives of underprivileged people. Donating for a good cause is not new in Indian culture; it has existed for a very long time when people donated food, money, and other resources to those in need. However, today, organizations are working for the benefit of poor people and providing them with well-rounded support. The Indian government also encourages charitable giving by providing a tax deduction under Section 80G of the Income Tax Act on donations to registered NGOs.

Here’s what you need to know:

What is Section 80G of the Income Tax Act?

Under Section 80G of the Income Tax Act, a donation made to a registered NGO or charitable institution is tax deductible. It is important to note that the deduction amount ranges from 50% to 100% of the total contribution that is made to a particular organization. So, all donations are not eligible for tax deduction; only donations made to registered organizations qualify for tax benefits.

Who can claim the Section 80G Tax Deduction?

An Indian citizen who is eligible to pay taxes in the country is eligible for a donation tax deduction made to an authorized charitable institution. An individual, company, firm, HUF, or any other person can get a tax deduction in India.

Eligibility Criteria for Tax Deduction under Section 80G of the Income Tax Act

  • The donation should be made to the approved recipients.

  • A donation made in kind is not eligible for a tax deduction.

  • A cash donation exceeding Rs. 2,000 is not eligible for a tax deduction. You need to pay by another mode of transaction, such as a check, NEFT, or UPI.

Depending on the category to which you are donating, the tax deductions are provided under Section 80G of the Income Tax Act. Donations made in categories 3 and 4 under Section 80G are subject to the qualifying limit.

Tax deduction on donations is a step by the Indian government to encourage more and more people to make a conscious effort toward creating a balanced and prosperous society.

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