Photo: iStock
Photo: iStock

Donating to specific institutions gives tax deduction benefit

Exemption limits on donation can vary depending on the institution and the Section under which it is registered

There are various ways to celebrate a festival. While some people like spending on themselves and gifting their friends and family, there are others who like to help someone or donate for causes they believe in. The government of India supports and motivates such gestures by offering tax deduction on certain donations made to specific institutions.

Institutions including non-government organisations, non-profits and charitable institutions come under the exempted list. Donations to such institutions qualify for tax deduction under various Sections of the Income-tax Act, 1961.

Check if the institution you are donating to comes under any of these sections of the Income-tax Act.

Section 80G: Charitable institutions and relief funds primarily come under this.

Section 12A: Properties held for charitable purposes are covered.

Section 10(23C)iv: Funds or institutions with charitable objectives of national or state importance are covered.

Section 10(23C)(v): Trusts or institutions for public, religious or charitable purposes are covered. Hospitals or other institutions existing solely for philanthropic purposes are also part of it.

Section 10(23C)(vi): University or educational institution existing solely for educational purposes are part of this Section.

Ideally, you should verify the institution before making any donation to ensure if the organisation is registered as an exempt organisation.

Log on to the income tax website, incometaxindia.gov.in. Under the “Important Links" tab, click on the “Exempted Institutions" link. You will be directed to a list of all the exempt institutions registered under the above-mentioned sections. As on 5 November 2018, there were 211,959 institutions registered as exempt institutions under the various sections.

There is a search engine alongside this list that can help refine your search. You can also find details about the institution such as its registered address, approval status, jurisdictional details, date of order, date of withdrawal, cancellation or expiry.

So before you make any donation check the status of the organisation. If you don’t find it in the above-mentioned list, your donation to the institution may not qualify as a deduction in your tax return.

Exemption limits on donation can vary depending on the institution and the Section under which it is registered. For instance, a donation to the Prime Minister’s National Relief Fund qualifies for 100% deduction, but a donation to the Jawaharlal Nehru Memorial Fund qualifies for 50% deduction. However, donations above a certain limit do not qualify for deduction.

Remember to collect a receipt of the donation, mentioning your name, the name of the institution you are donating to and your permanent account number. You would need to mention these while filing your return and claiming the deduction.

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