Tax deduction on your donations
1. Why do I get a tax deduction on my donation?
Many of India’s poor live on less than Rs130 a day. This is hardly enough to feed a family of four, take a sick child to hospital or provide education for the poorest of the poor. Credible NGOs provide food, shelter, education and treatment for people who have dire need of it but cannot afford to pay for it. The government grants economic concessions to registered NGOs who work for the needy, and also to citizens who donate to those NGOs.
2. How does the government register NGOs?
As per the terms of registration, NGOs are mandated to spend spend 85% of their annual income on programme expenses in a given year.
Those that meet this qualification are granted a 12A certificate which exempts the organisation from paying income tax subject to fulfillment of conditions. NGOs in turn apply to the Income Tax Commissioner for an 80G certificate which enables donors to claim a tax deduction based on their donation. NGOs with an income of over Rs50,000 a year are required to have their accounts audited by a Chartered Accountant, and are also expected to file their returns with the Income Tax Commissioner each year. Failing to do so can lead to the government cancelling their registration licence. HelpYourNGO has listed 600 NGOs with audited financial reports for the past three years. You can be assured that these NGOs are compliant with legal requirements and spend their income on beneficiaries.
3. What kind of donations can I make?
All types of resident Indian taxpayers can claim a deduction under the Income Tax Act, 1961.
- Donations to certain entities are eligible for deduction under section 80G. These include prescribed government schemes and registered NGOs
- You can claim deductions up to 10% of your adjusted gross total income while donating to NGOs. However, if you are donating to designated government schemes, there is no qualifying limit
|
Category |
Name |
Deduction |
Qualifying limit on income |
|
Prescribed Government Schemes |
PM's National Relief Fund |
100% |
None |
|
Other Government Schemes |
PM Drought Relief Fund |
50% |
None |
|
Registered NGOs |
50% |
10% of adjusted gross total income |
- Donations made in cash exceeding Rs 2,000 are not eligible for deductions, as are donations in kind (materials, clothes, medicines, vehicles etc.)
4. How do I claim my deduction?
Charitable donations are accounted for under section 80G of the Income Tax Act.
- Ensure that the NGO gives you a receipt and 80G certificate when you make your donation.
- When filing your returns, include the following details: name of the donor, PAN, address, amount contributed, receipt and 80-G certificate
