When you pay your taxes timely, you contribute to the development of your community. However, taxes aren’t the only way to give something back to the society, you can also do charity. To encourage charity, government provides tax deductions to the donors. Today, on International Charity Day, let’s explore what you could gain by giving away to others.
Section 80G: There are a number of relief funds and charitable institutions which can give you tax benefits u/s 80G of Income Tax Act, 1961. This deduction ensures that you don’t scrap your noble thoughts on doing some charity. Remember that your donation in cash exceeding Rs. 10,000 will not qualify for deduction under this section.
Section 80GGA: You can also make contributions towards scientific research and rural development. The whole amount donated to such causes is allowed as deduction but if you are donating cash, you will not get deduction beyond Rs. 10,000.
Section 80GGC: You might not know this, but you can donate to political parties and earn tax deduction. Section 80GGC makes 100% of the donated amount eligible for deduction. Only condition is that it is not paid in cash.
Remember that not all the donations are eligible for 100% tax deduction.
You can donate to any charitable institution as you please but remember that most but not all of them qualify for tax deduction under Income Tax Act, 1961.
You should also know that donations made in kind are not eligible for tax deduction but this should not stop you from donating your old clothes, toys and utensils.
Keep all the relevant documents like stamped receipts and photocopy of certificates etc. to claim your tax deduction.
Your act of charity does not only help you save taxes but has a much greater impact on your life. Several research reports say that giving to others can make you happier and satisfied. So, don’t shy away from charity if you don’t have much to offer. Remember, it does not matter how much you give away, what matters is the intent behind the act. The primary purpose of your charity should not necessarily be to save tax. Instead, you can donate the amount you saved from taxman and give it away as charity.