80g of income tax act

Section 80g of income tax act 1961 is a vital act. The Income Tax Act has a provision known as section 80g that enables taxpayers to claim deductions for a variety of donations made. For donations given to designated relief funds and charity organisations, the deduction under the Act is possible.

Not all charitable contributions are deductible under Section 80G. Only contributions to the designated funds are eligible for a deduction. The Section 80G deduction was created by the Indian government to promote charitable giving. The government wants to encourage people to donate more money to deserving charities by reducing income taxes.

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The amount contributed may be deducted from income when filing the assessee's tax return in accordance with Section 80G. Independent of the sort of income produced, deductions under Section 80G may be claimed by individuals, partnership businesses, HUFs, companies, and other forms of taxpayers.

Donors should make sure their receipt includes the registration number given to trusts and organisations that are registered under Section 80G by the Income Tax Department. This registration number must be active on the day of the gift in question. Donations are not deductible if they are made while the section 80g registration is still active.

Percentage of deduction under section 80g

There are a few restrictions on donations made to charities and trusts that qualify for tax benefits. Four main categories can be used to categorise donations made under Section 80G. The categories are listed below:-

(1) 100% tax-deductible donations (Available without any qualifying limit)

Donations given under this category are eligible for a 100% tax deduction and are not subject to any qualifying requirements. These deductions apply to contributions made to the National Defense Fund, Prime Minister's National Relief Fund, National Foundation for Communal Harmony, National/State Blood Transfusion Council, etc.

(2) 50% off on all donations (Available without any qualifying limit)

A 50% tax deduction is available for contributions given to trusts such as the Prime Minister's Drought Relief Fund, the National Children's Fund, the Indira Gandhi Memorial Fund, etc.

(3) 100% tax-deductible donations (up to 10% of adjusted gross income)

Contributions to the Indian Olympic Association and regional governments that assist family planning are eligible for tax deductions under this category. In some cases, a donor may only deduct up to 10% of their adjusted gross total income. Donations beyond this amount are capped at 10%.

(4) 50% tax deduction for donations (up to 10% of adjusted gross income)

This category allows for deductions for gifts made to any local government or agency that would utilise the money for a charitable purpose. Only 10% of the donor's Adjusted Gross Total Income is allowable as a deduction in certain circumstances. Donations beyond this limit are limited to 10%.

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