How to save tax is a question that undoubtedly is on every taxpayer’s mind! This thought hasn’t evaded a single salaried professional. Apart from Section 80C and Section 80D, here is another way to exempt taxes – Section 80G of the Income Tax Act. Section 80G of the Income Tax Act reduces the tax burden on an individual by listing various deductions that can be availed depending on the income calculated as taxable.
Let’s simplify this with examples - tax expenditure savings can happen through several deductions like investments, house rent, medical insurance, interest on the savings account, etc. In this way, not only does the government take off the load from the taxpayers back, but it also promotes those activities for which these deductions are applicable. One such crucial tax-saving opportunity is Section 80G that helps the person with donation tax exemption on the donations made to NGOs and charities. Certain rules under the IT Act specify the amount of donation that can be claimed under Section 80G; a certain percentage is defined. However, the total worth of the donated amount that can be claimed as a deduction fully depends on the entity to which one is donating funds.
Taxpayers can claim donation tax exemption under Section 80G only if their donation is made through cheque, draft, or cash. While one can donate any amount to a charity/NGO, the deduction is only obtainable for a cash donation that does not surpass INR 2,000. To curb the use of black money and to make provision for a cashless economy, the Finance Act, 2017 modified Section 80G of the Income Tax Act; it states that no deduction shall be allowed under Section 80G concerning the donation of any sum exceeding INR 2000 unless this sum is paid by another mode other than cash.
To avail of this tax benefit, one must present the customary proof of payment given to the trust/entity as an attestation of the donation. One must also ensure that this proof includes the name, address, PAN Number, registration number of the trust, name of the donor, and amount donated, written in figures and words. These particulars are crucial and will be a key requirement at the time of filing ITR to claim the deduction.
NGOs can carry out their social welfare activities and programmes through the donations they receive. Determined to provide and uplift the mistreated and oppressed children of the nation, Save the Children works to make a difference in their lives, every day. It operates on donations to sustain its projects and continues setting up many more. Any donation made by you – one-time or monthly, will be utilised by them to plan and implement projects that help benefit the disadvantaged children of India.
If you have donated to Save the Children and wish to avail of this benefit, visit https://supportapps.savethechildren.in/DonorSummary/. Also, if you wish to tell us other ways of how to save tax, do let us know in the comments section, below.