Donating to a non-governmental organization is one of the noblest ways to save tax

We are all aware of income tax and we are also aware that it is our fundamental duty to pay taxes on time every year. Taxes are applicable for all salaried and self-employed individuals earning above a certain income level. Additionally, businesses also need to declare their income and profit based on which the tax slab is decided for them. The taxes we pay are utilised by the government for developmental and security purposes such as constructing hospitals, schools, welfare centres, roads, maintenance of defence forces and the like. However, the Government has also made the provision of tax deductions for the welfare of the taxpayers.

donating to charity save tax

Applicability of tax deduction

The Government of India has made a provision under the Income Tax Act that relaxes the taxable amount of those who have made investment for the welfare of the self or the society. For instance, with regards to welfare of the self, if you are paying for house rent or children education; or you have invested on housing loan or medical insurance, you can avail tax deductions on your taxable income. Similarly, with regards to welfare of the society, is you contribute donations to registered non-governmental organizations in India, you can avail tax benefits under Section 80G of the Income Tax Act.

Charity – the noblest way to save tax

Investing on personal progress is a must, but at the same time, we must also look beyond ourselves. As citizens, it is our responsibility to contribute towards the upliftment and development of the country. Hence, as a means to encourage people to get involved with charitable organisations, the Government has made the provision of tax exemption donation.

Funds and fundraising are an important aspect of an NGOs operations and your contribution supports non-governmental organisations in India to make progresses in their respective fields of work. This in turn brings about a desirable and sustainable change in the society.

For instance, if you relate to women empowerment, you can choose any of the NGOs working in this field. Similarly, if you strongly identify with health and education of children, you can support child-centric NGOs such as The Akshaya Patra Foundation that provides free school meals to more than 1.8 million children on each school day across 12 States and 2 Union Territories of India.

When you donate to registered non-governmental organisations in India, you may either get 100% or 50% exemption on the donated amount based on a pre-decided slab and criterions set by the Income Tax Act depending on the type of NGO and its cause. Your support to any charitable causes makes you a part of the solution for several critical issues obstructing the progress of the society. Your choice of NGO could be any but your support potentially transforms the entire ecosystem of the society for the better along with making you eligible for tax exemption donation.

In conclusion, as you invest for yourself, take a moment to act for the society too of which you are an integral part!

Disclaimer: Each of the above-mentioned tax exemption plans/investments has its own terms and conditions. Hence, it is advised to understand the respective tax exemption clauses prior to making an investment or a claim.

An Opportunity to Avail 100% Tax Deduction

If you are pressed for time with tax planning, we have for you some information on financial year-end donation to charity. It won’t just help you avail 100% tax deduction, but also ensure that you experience the joy of giving.

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Charitable institutions play a crucial role in socioeconomic development of the country, and therefore, there exist Income Tax rules that have been specifically constituted to encourage people to donate to charities. Some charitable projects are approved as eligible for tax deductible donations under Section 35AC and Section 80GGA.

If you have your own business or you happen to be a salaried individual donating to an eligible institution, then you can claim 100% deduction under Section 35AC. If, on the other hand, your source of income is anything other than business, then deduction can be claimed under Section 80GGA. These provisions in the Income Tax Act are meant to help charitable institutions attract prospective donors and raise funds to run the programmme.

If you want to avail tax benefits, you need to check which projects are eligible for the same. It’s the Central Government that decides which programme of which charitable institution is to be approved for tax deductible donation under various sections of the IT Act. The Akshaya Patra Foundation’s Mid-day Meal Programme is one of the projects you can donate to in order to avail 100% income tax exemption under Section 35AC.

Any donation of Rs. 500 and above is eligible for tax benefit in this case. If say you donate Rs. 2000, then this amount will be deducted from your taxable amount. You will receive a certificate acknowledging your contribution. You can use the same to claim exemption from taxable income.

By donating to Akshaya Patra, you will be doing your bit to feed children, bring them to the classroom, and nurture smiles.