Tax relief for donations made for disaster relief

K. ARAVIND

Those who help the needy through donations are eligible for tax relief. Under Section 80G of the Income Tax Act, such donors are entitled to tax deduction.

 

Not all types of donations are tax deductible under Section 80G. Only contributions to government-recognised institutions and relief funds are tax deductible. This includes government and non-government organizations.

 

When making a donation to a non-governmental organisation, it is necessary to check whether the institution is eligible for exemption under Section 80G. If required, the registration certificate of the institution can be checked. The list of eligible companies for tax deduction is given on the website of the Income Tax Department (www.incometaxindia.gov.in). At the same time this list is not exhaustive.

 

Contributions made to political parties under Section 80G are not tax deductible but can be deductible under Section 80GC. Contributions made to foreign companies are not tax deductible under Section 80G.

 

Tax deduction under Section 80G is available only if the money is donated. Those who want to get tax relief should donate in cash. Donations in the form of clothing or food items will not be tax deductible.

 

Donations in cash are tax deductible up to a maximum of Rs.2000. This limit is applicable from the financial year 2017-18. Earlier, the limit was Rs.10,000. Therefore, those who want to avail tax deduction for amounts above Rs.2,000 should make a donation by check, demand draft or online fund transfer.

 

There are some limitations to getting a tax deduction. One hundred per cent donations to government institutions are also tax deductible. For example, 100 per cent contribution to the Chief Minister’s Disaster Relief Fund is tax deductible. At the same time, only 50 per cent of donations to NGOs can claim tax relief.

 

As such, the tax deduction is available only for 10 per cent of the total annual income after all tax deductions. Ten per cent of the tax-deductible income received under all sections except Section 80G is considered eligible for tax deduction. That is, 10% of the amount after deduction, including tax deduction of Rs.1.5 lakhs received under section 80C.