Tax Benefits of Making Donation to NGO

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Making donations to NGO could possibly be one of the finest things that one can do ; it not only helps us reach out to the people in need and make out some constructive changes in their lives, but it also comes with its own set of returns. Everybody must be aware of the fact that there are certain concrete and specific tax benefits associated with making donations to an non-governmental organisation.

First of all, let us try to understand what the term donation exactly means. ‘Donation’ means giving money or any kind of financial help to an organisation run for the welfare of underprivileged people without the expectation of anything in return – it is an act of charity done with the intention of making the society a better and more wholesome place to live in. It is hence understandable that nobody can make any profits by making donations as they’re meant for absolutely  philanthropic purposes. For the same reason, these are almost always absolutely exempted from the bracket of taxation.

The government also wants to encourage other people to contribute to the social cause and also wants to make sure that the taxes don’t take the smile away from your face while you try to lit other people’s faces. For the same purpose, the Government of India under section 80 G, chapter 6 A, of the Income Tax Act, gives the exemptions on donations to specific certified NGOs. Perhaps, you must be wondering why NGOs need to be certified for the same. It is so because a lot of people with corrupted minds tend to make false claims of having made donations while actually trying to convert their black money in white money. Given such a scenario, if a particular NGO is well certified by the government, it can be easily be relied upon and the donations can be easily verified and authenticated. Hence, only the NGOs that are registered with the Income Tax Department reflect exemption status under section 80G, 80 GGA,  35AC (I and I’ll) of the Income Tax Act of 1961.

While making the donation to an Non-Government Organisation a certain amount is qualified for the tax deduction under section 80 G, it will qualify for deduction only up to the limit of 10% of the gross total income within which again there would be certain limits. Note that certain donations can qualify for deduction at the rate of the 100 %, and some , at the rate of 50%. One another important aspect of the same is the proof of payment and deduction while you are making a donation the proof of payment has to be submitted. Most of the NGOs today encourage cashless donations by a cheque or a demand draft. The current budget has restricted the tax benefit on cash donations to the limit of Rs.10,000 only.

One last advice on the same is to take note of the PAN card number of the institution that you are planning to donate to because it is important and will be required at the time of filling the tax returns and will also help to record your transactions. Now that you know that you can easily donate to organisations without pinching  your pockets, now is the time to reach out to the needy ones. Geetanjali Care , a Non -Profit Organisation, has been working in the direction of making the lives of underprivileged people beautiful and hopefully you can contribute to the scene by connecting with them and their noble mission.