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Can an NRI claim tax deduction on donations to NGOs in India?

If you intend to remit funds from outside India, you may check with the NGO if it has received approval from the government of India to receive foreign donations and it is registered under Section 80G of Income-tax Act, 1961 in India. Photo: iStockPremium
If you intend to remit funds from outside India, you may check with the NGO if it has received approval from the government of India to receive foreign donations and it is registered under Section 80G of Income-tax Act, 1961 in India. Photo: iStock

  • An NRI is eligible for deduction on donations if the NGO has received approval from the government to receive foreign donations, it is registered under Section 80G of Income-tax Act and the donation is made via electronic means

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I am a non-resident Indian (NRI) based in Australia. I want to send 1 lakh each to two non-governmental organizations (NGOs) in India. Can I get tax deduction for this or can deduction only be claimed if the money is sent from my Indian account?

—Name withheld on request

Under the India Income-tax law read with Foreign Contribution (Regulation Act), 2010, an individual is eligible for deduction from taxable income in India for donations paid to NGOs in India provided the following conditions are satisfied:

-The NGO has received approval from the government of India to receive foreign donations

-The NGO is registered under Section 80G of Income-tax Act, 1961 in India

-The donation is made via electronic means.

Thus, if you intend to remit funds from outside India, you may check with the NGO if it has received approval from the government of India to receive foreign donations and it is registered under Section 80G of Income-tax Act, 1961 in India.

The deduction for donation made to the NGO registered under Section 80G of Income-tax Act, 1961 will be lower of (a) 50% of total donation made; or (b) 50% of 10% of adjusted gross total income. The adjusted gross total income will be calculated as total income less all deductions available (except deduction under Section 80G). The deduction is available only if individual taxpayer has not opted for concessional tax rate under the India Income-tax law which is available if the taxpayer is willing to forego specified exemptions and deductions (including deduction under Section 80G).

(Query answered by Sonu Iyer, tax partner and people advisory services leader, EY India.)

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