Section 80G offers tax-saving provisions for charity and enables tax exemptions for everyone – individuals, Hindu Undivided Families, companies, or partnership firms. It is also applicable to Non-Residential Indians, making it a highly attractive investment option.
The government offers Section 80G donation tax rebate as an incentive for donation. Under the Income Tax Act, Section 80G can be accessed via contribution to relief funds and charitable institutions.
Mode of payment
Taxpayers can claim deduction under Section 80G if their donation is made through cheque, draft or cash. While one can donate to NGO any amount, donation deduction is only available for cash donation that does not exceed Rs. 10,000. Donations material like food material, clothes, medicines etc. are not valid for Section 80G deduction claims. However, FY18 onwards, cash donations exceeding Rs 2000 are not be allowed as deduction. This therefore makes it better to use cheque or online donation to qualify as deduction, aligned to the government’s vision for cashless economy and transparency.
Subsections to Section 80G:
Contrary to popular belief section 80G of Income tax laws is not just limited to donations made to charities. There I also a rebate on donations made to entities engaged in scientific research and rural development activities. In fact, they get you 100% tax deduction under Section 80GGA. This is also supplemented by Section 80GGC which gives a 100% tax deduction for donations made to any political party registered under section 29A of the People Act 1951.
How does a Nonprofit/NGO qualify for tax exemption?
For an NGO to receive tax-exempted donations it needs to fulfil certain criteria. It should be formally registered under the Societies Registration Act 1860 or under section 25 of the Companies Act 1956. All the NGOs sources of income should be through permissible means. All income and assets of the NGO must be used for only supporting humanitarian causes. The NGO must not spend exclusively for a particular religious community or caste. All accounts of the NGO must be clearly maintained and be transparent.
For applying for tax exemption while filing your tax returns you should possess a stamped receipt from the NGO or trust. This should clearly mention the charity’s name, address and PAN, along with your name, and amount donated. An online receipt will work.
Increasingly, Indians are becoming more socially-minded and willing to donate to NGO fundraising. Platforms like Crowdera have set high benchmarks in transparency, ease and availability of the free Crowdfunding platform. It provides customised and automated tax exemption certificate to donors, as well as the satisfaction of having made a difference. Crowdera does this through its well formulated platform which provides features like team fundraising and syndication, integration of various payment gateways, along with providing different widgets and buttons which enable you to advertise your Crowdfunding campaign across all the online platforms.