Editor's note: This exemption is not valid anywhere after April 1st, 2017]
Feeling the taxman’s pinch on your salary? We have good news for you. Did you know that you can donate to charity AND get 100% tax exemption on your donation? Yes, it's true. This option will not exist after March 31st, 2017, so hurry! Read on to find out more.
Savings, investment and insurance will all help you reduce your taxable income. We all know how to maximise our allowances in Section 80C, 80D, etc. But did you know there’s a hidden tax-saving gem in Section 80GGA?
Section 80G applies to donations to most NGOs. As you might know, donating to an NGO qualifies you for a 50% deduction of the donated amount. So, if you donate Rs5,000 to an NGO, you can claim a deduction of Rs2,500 from your taxable income (50% of the donation amount) in one shot. This deduction applies to all donations subject to certain limits.
(Remember – the deduction is only available if you donate to a registered NGO and produce your receipt and 80G certificate along with your tax return. Don’t forget to ask for it the next time you donate. You can also donate to any of 650 NGOs on our website www.HelpYourNGO.com and receive a receipt and 80G certificate within three days of your payment being cleared. No hassles for you!)
100% tax exemption on your donation
50% sounds good, but 100% is even better! Many don’t know that Section 35AC/80GGA are clauses that will sweeten the pot. Here it is – if you donate to an NGO with eligible projects under Section 35AC/80GGA, you can get a 100% exemption of that donation amount from your taxable income. A donation of Rs10,000 means you can claim an exemption of Rs10,000 from your taxable income (subject to certain limits). Your donation will not only benefit you but a deserving person many miles away from you.
Now, of course the government doesn’t want this clause to be misused by fraudulent NGOs. NGO projects can offer this deduction under Section 35AC/80GGA only after a certain amount of scrutiny, and only for specific, time-bound projects. In fact, the Government is withdrawing Section 35AC/80GGA section after 31st March 2017, so complete your donations in time.
Find an NGO
You obviously can’t spend your time visiting NGO websites in search of their projects under Section 35AC. We’ve made your job easier for you by launching a search facility that lets you find existing and compliant projects! Use this link to find an NGO by cause or even your desired donation amount. For example, you might want to donate Rs2,000 to an NGO that helps the elderly. You can now choose to sponsor anything from cancer care to cataract surgeries for the elderly at HelpAge. How about a Braille kit or Braille wrist watch for a beneficiary at the National Association of the Blind (India)?
We’ve found some really exciting options for you! There are 45 NGOs with nearly 100 donation options on our site. Look for the R next to the NGO name to see which NGOs we recommend! Here are some examples:
- Mid-day meal scheme at Akshaya Patra Foundation
- Jagshanti home for adult girls who were orphans or abandoned or had a difficult past. Many stay at the home while pursuing higher studies or building their own careers.
- Cataract surgery or the food cost of poor patients at the Sankara Eye Hospital
What to do next
Once you’ve found an NGO you like, check the box next to it and click proceed. Leave your details in the pop-up box, and we will send an email to you and the NGO requesting them to send you payment details and a receipt once you have completed your donation. Keep the receipt and the tax certificate handy while filing your returns. Remember to complete all your donations by 31st March so you get full advantage!
This article first appeared on www.Equitymaster.com on 13th February.