Donating to a worthy cause not only brings mental peace but also helps lower your tax load. Many Indians are not aware that under the Income Tax Act, their contributions could result in savings. We’ll go over how donation tax relief works, which donations qualify, and how much actual tax benefit you could get in this blog.
Describe relief from donation taxes.
Relief from donation taxes results in a tax deduction upon money donated to approved charities or companies. Section 80G of the Income Tax Act lets this happen. Although you do not get money back from the government, your taxable income is lowered, so lowering your tax payback.
Who is entitled to relief from donation tax?
Everyone, HUF, business, or company
- You have to provide evidence of your donation—receipt from the charity.
- For most situations, you should have made the donation using non-cash method.
- Note: For tax relief, cash donations are just allowed up to ₹2,000. Use cheque, UPI, debit card, etc., for more than ₹2,000.
Kinds of Donations and Tax Relief
Donations under Section 80G fall into four types:
- 100% deduction without restriction
For instance: Prime Minister’s National Relief Fund, PM CARES, National Defence Fund - 50% deduction free from restrictions
For instance: Indira Gandhi Memorial Trust, Jawahralal Nehru Memorial Fund - 100% deduction limited by 10% of your modified gross income
For instance: Government or municipal authority for family planning promotion - 50% deduction limited by 10% of your modified gross income
For instance: Donations to approved NGOs or charitable trusts
Records Needed to Claim Tax Relief for Donations
- Donation receipt with the trust’s or NGO’s PAN is required in order to claim donation tax relief.
- Form 10BE, which the trust sent to verify your gift.
- Mode of payment proof (UPI receipt, bank statement, etc.).
ITR Claiming Relief from Donation Tax
Under Section 80G on your Income Tax Return, enter the donation amount.
- Talk about the trust’s name, PAN number, and donation amount.
- The system will automatically figure your expected deduction.
Example of Tax Reductions
Let your taxable income be ₹ 8,00,000. You give PM CARES ₹50,000—100% deductible:
Taxable income is ₹7,50,000 – ₹50,000.
This will lower your tax outgo and perhaps cause you to move to a lower slab.
Last thoughts
One excellent way to help important causes and save taxes is by means of donation tax relief. Just be sure you keep all of your receipts safe, pay with appropriate methods, and donate to reputable organisations. Returning benefits not only to others but also to your financial situation.
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