What is Income Tax Exemption in India and how does it work?
Income tax exemption refers to a deduction allowed under Indian tax law that reduces your taxable income. Depending on the type of income and relevant sections of the Income Tax Act, individuals can either be fully exempt from paying tax or pay a reduced tax rate on specific income. These exemptions are introduced to encourage certain economic or socially beneficial activities.
How can I save tax by donating to an NGO?
Donating to a registered NGO under Section 80G of the Income Tax Act, 1961, allows both the NGO and the donor to avail tax deductions. To claim this benefit, the donor must present a valid donation receipt issued by the NGO.
What is Section 80G of the Income Tax Act?
Section 80G allows individuals to claim a deduction from their taxable income for donations made to charitable organizations that have received approval from the Income Tax Department under this section.
What tax exemption benefit do I get?
Donations of ₹500 or more to the Trust are eligible for a 50% deduction from the donor’s taxable income, as per Section 80G of the Income Tax Act.
What is the minimum amount that needs to be donated to get a tax exemption?
To manage documentation expenses, a minimum donation of ₹500 is required to qualify for tax exemption under Section 80G.
What is the maximum amount for income tax exemption under 80G?
The maximum deduction limit depends on the type of donation. In some cases, there is no upper limit, while in others, deductions can be claimed up to 10% of the adjusted gross total income of the donor.
Do you issue tax receipts? How long does it take to receive them?
Yes, tax receipts are issued. Donors can expect to receive the receipt within 10 days of making the donation.
Is there a tax exemption on cash donations as well?
Cash donations exceeding ₹2,000 do not qualify for an 80G certificate.
When can I get a tax exemption certificate?
The tax certificate is generated within 6 days of receiving an online donation. Including the courier process, it usually reaches the donor within 10 days. For offline donations, it may take 15 to 20 days.
From the financial year 2021–22, under updated Income Tax rules, donation details must be uploaded on the Income Tax website using Form 10BD, and certificates must be issued as per Form 10BE. These will be emailed to donors periodically.
What if the tax receipt is misplaced?
While a duplicate receipt may not be provided, a copy of the Income Tax exemption certificate can be shared with the donor.
I am an NRI. Will I get a tax exemption on my donation?
Yes. NRIs who are Indian citizens and hold an Indian passport are eligible for tax exemption under Section 80G. Be sure to enter your Indian PAN card number in the online donation form to avail this benefit.
What certificates are required to claim tax exemption under Section 80G?
To claim deductions under Section 80G, donors must have:
- Donation receipt
- Photocopy of the 80G certificate
- Registration number of the charitable trust
Can I claim tax exemption under Section 80G through my employer?
Yes, tax deductions under Section 80G can be claimed through your employer. A certificate from your employer confirming that the donation was made from your salary will be required.
Does M.P. HEWT accept in-kind donations?
M.P. H.E.W.T. does not accept in-kind donations. However, you can volunteer your time or sponsor equipment that helps in delivering hygienic and nutritious meals.
What are the benefits of donating to NGOs?
Donating to a registered NGO provides eligibility for tax deduction under Section 80G of the Income Tax Act, 1961. It also offers emotional satisfaction by helping others and contributing to a noble cause.
How is the 80G donation calculated?
If you donate ₹5,000 and your annual taxable income is ₹2,00,000, then 50% of your donation (i.e., ₹2,500) will be deducted from your taxable income. So, your net taxable income becomes ₹1,97,500. Your tax will then be calculated based on this reduced income.
What is the limit for donation under 80G?
Cash donations up to ₹2,000 qualify for an 80G certificate. Donations exceeding ₹2,000 must be made through non-cash methods to be eligible for 80G deductions.