Are you looking for ways to reduce your taxable income? One option is to make donations to eligible organizations and claim deductions under section 80G of the Income Tax Act. This can help you save a significant amount of tax. Let's look at the sources that qualify for 80G exemption.
What is Section 80G?
Section 80G of the Income Tax Act allows you to claim deductions for donations made to certain approved funds, charitable organizations, and trusts. The amount you can claim as a deduction depends on the type of fund or institution you donate to.
Sources Eligible for 100% Deduction
Some donations qualify for a 100% deduction from your taxable income. This means you can reduce your taxable income by the full amount you donated.
Approved Funds
- Prime Minister's National Relief Fund
- National Defence Fund
- Approved University/Educational Institutions/temples
- Zila Saksharta Samiti for promoting literacy
Charitable Trusts/Institutions
- Donations to certain charitable trusts and institutions approved by the government for activities like relief of the poor, education, medical relief, etc.
Sources Eligible for 50% Deduction
In other cases, you can claim a deduction of 50% of the donated amount from your taxable income.
Funds for Social Causes
- Indira Gandhi Memorial Trust
- Rajiv Gandhi Foundation
- AIIMS Funds
Local Authorities/Funds
- Donations to government or local authorities for promoting family planning
- Certain funds like the National Children's Fund
How to Claim the Deduction
To claim a deduction under section 80G, you need to make your donation through an approved mode of payment like cash, cheque, or online transfer. Make sure to obtain a receipt from the recipient organization.
When filing your tax returns, fill in the details of your eligible donations in the relevant section. You can claim the deduction based on the percentage allowed for that organization.
Maximize Your Tax Savings
While making donations for a good cause is admirable, you can also utilize section 80G strategically to save on taxes. Here are some tips:
- Research approved organizations carefully before donating
- For larger donations, choose recipients qualifying for 100% deduction
- Combine 80G deductions with other allowed deductions to further reduce taxable income
By taking advantage of section 80G, you can do your bit for social causes while also lowering your annual tax outgo. Explore all the eligible sources to maximize your tax savings.