Donation with a positive mindset earns you the motive with which it’s done. Every donation to an NGO counts because it’s ultimately your money that is being utilized for judicious purposes. Whether it’s for homeless children, isolated adults or poor families in rural and urban areas, your money, by all means, is contributing. Another positive aspect of donations is that you are also entitled to certain tax benefits as per the Income Tax Act, 1961. The most common being donation under 80G of the IT Act where you can receive tax exemptions up to 100 percent.
There is no greater happiness than doing something positive for someone else. NGOs in developing countries like ours have greater roles to play in order to create a sustainable environment for the underprivileged. Hence, comes the importance of donations. Every NGO yearns for donations in order to make the life of those in dire needs much better. Millions of people in India are devoid of a properly balanced meal twice a day. Your contributions do count not only for the poor people’s welfare but also devote to our economy as well.
There have been some major amendments over the last few years regarding cash donation under the Income Tax Act, let us throw some light on it:
Donation under 80G
Earlier, you could contribute cash donations to NGO under section 80G and 35AC and receive tax deductions and exemptions from both. The latter is no more effective since FY 2016-17 but you can still get tax benefits from section 80G.
As per the latest modifications under the IT Act, you can receive the exemption in donation amount made by cash transactions. The maximum amount in order to receive 100% exemption is ₹2,000 only. The amount was reduced from ₹10,000 to ₹2,000 which is as per the existing rule.
Cash amount transacted for donations exceeding ₹2,000 are devoid of any tax deductions or exemptions. If you wish to contribute more, you can do it by cheque or Demand Draft but not in terms of physical amount, the only case where exemption is allowed.
100% donation tax exemption is legally permitted by the government to all NGOs across the country. If you’re an employee you must inform your current employer (can be in the form of an advance notice) about the details of your monetary contribution and about other IT-related savings’ details in order to avoid further deductions like Tax Deduction at Source (TDS).
If you hold an Indian passport you are entitled to claim 100% tax benefit but if you’re an NRI, an exemption is still possible if that organization is registered in that country and you contribute to the residential branch.
In conclusion, all we have to say is that donation is an act of charity done with a motive to help the organizations which are individually or collectively trying to bring balance and sustenance in the lives of those who are suffering deeply. Also, there are various possibilities via which you can earn tax benefits up to 50% or 100%, you just to know the procedures especially, if you’re a first time donor.
Have you ever donated earlier? How did it feel when you actually performed a good deed for someone else? Do share your experience with us.