Giving to charity is a good deed; moreover, it can help you find some tax season relief. You can claim a deduction from your Income Tax Return if you donate to recognised charitable organisations. This process has bearing on what is known as a charity tax return benefit. Let’s learn how to properly claim it and how helping a charity might help you legally save taxes.
What Is a Charity Tax Return?
If you have made donations to registered charitable organisations, a charity tax return is the advantage you get when submitting your income tax return. Section 80G of the Income Tax Act allows you to claim your donation amount under this section. This lowers your whole taxable income, so lowering your tax payment.
Who Is Entitled to Claim this Deduction?
A charity tax return benefit may be claimed by anyone who donates, including:
- Salaried staff members
- Company owners
- Independent contractors and experts
- Senior people
You have to donate to an organisation registered under Section 80G.
Kinds of Contributions That Count
Section 80G grants two kinds of donations:
- 100% deduction without limit, say for the PM CARES Fund or the National Defence Fund
- 50% deduction, both with and without limit, for most local charities and NGOs
Sometimes, limits are based on 10% of your gross total income.
Conditions Underlying Claiming for Charity Tax Return Benefit
Benefits from a charity tax return:
- Donation can be made digitally (NEFT, cheque, UPI, etc.) or in cash (up to ₹2,000).
- Donations have to be made to a registered, approved trust or fund.
- You have to get a receipt including the name of the charity, PAN, and registration number.
- One should claim the deduction in the same financial year as the gift.
How Should One Claim the Deductible on Your Tax Return?
- Go to the “Deductions under Chapter VI-A” part as you file your ITR.
- Choose Section 80G.
- Enter the donated amount and the kind of organization.
- If necessary during examination, attach the specifics of the receipt.
- Send and double-check your return online.
The Maximum Amount You Could Save
Your taxable income drops from ₹10 lakh to ₹9 lakh if you donate ₹1 lakh to a fund with 100% deduction. Depending on your slab, this can save significant taxes.
Final Thoughts
Giving to charity benefits people in need as well as provides a legal tax benefit. One excellent approach to save money and do good at the same time is the deduction from charity tax returns. Just make sure you keep correct receipts for easy processing and donate to approved groups.