Kindness in any way is great, because it give joy to the other individual and helps them in some way or the other. The best way that corporations can undertake these acts of kindness is by donations and charity to the various institutions that require these funds, as all these acts are often considered as acts of philanthropy. Section 80 G of the Indian law states that all donations made under this act are applicable for benefiting from 80g deduction, but only if the institutions to whom the charity is being given are registered under the section 12 A, so that all cases of fraud and malpractices can be avoided at every cost.
Whenever an individual files for an income tax return, they can claim for the defection under this act without a doubt, and the same benefits are available for NRI citizens also. The limit for the charity amount is usually set by the government, and any individual, company or HUF can contribute to these donations without any restriction.
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Individuals should carefully check and verify all the documents of the charity of trust before making any kind of donation, so that they can prevent themselves from getting into any trouble in the future. But if the donations are made to any kind of foreign trusts or political parties, it will not be included in this section, and hence you won’t be able to claim any deduction. Following are some of the benefits/kind of deductions that you can avail under this section:
- Donations with 100% deduction (No qualifying limit): All the donations in this category are completely tax deductible, as there is no qualification limit to be met. The various donations in this category include donations to National Defense Fund, The National Foundation for Communal Harmony, Prime Minister’s National Relief Fund, National/State blood transfusion council, etc.
- Donations with 50% Deduction (No qualifying limit): Every donation that goes towards Indira Gandhi Memorial fund, Prime Minister’s Drought relief fund, National children’s fund is applicable for 50% tax deductions in this category.
- Donations with 100% deduction (10% of adjusted gross total income): All donations that are aimed at promoting family planning and the role of Indian Olympic Association with the help of local governments are included in this category. But in this case, only 10% of the gross adjusted total income of the donor is eligible for any kind of deduction.
- Donations with 50% deduction (10% of adjusted gross total income): In this category, the donations are directly made to the local governments, who then use these funds for charitable purposes by themselves. The same 10% criteria applies here, any donation which exceeds this amount is capped at 10%.
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There are various kinds of 80g income tax deductions, and all of them are mentioned above with proper explanation, which will help you in getting an idea about what are the possible ways you can get tax benefits on your donations and how they can be helpful for you.