All you wanted to know about 80G exemption

by namit.agarwal on Mar 03, 2011      Category: Useful Resources Tags: samhita tax Expert Advise

Donations made to the NGO’s which are registered under section 80Gare exempt from tax. While many of us think that the entire amount paid as donation to the NGO is tax exempt, this is not the case since the same is subject to certain limitations and computations for ascertaining the eligible amount for the tax exemption.  To start with, only donations made to NGO’s which have a tax registration with tax authorities under section 80G would be eligible.  So it is imperative that you verify the registration certificate and the validity period of such a registration before donating and being eligible for tax breaks.


And then, there is a not so simple computation involved in ascertaining the quantum of deduction.  Only donations of upto 10 percent of the Gross Total Income would qualify as tax deductible donations under section 80G. A maximum of 50 percent of the amount given as donations can be exempt.  


To illustrate, if you are donating Rs 50,000, you can get an exemption up to Rs 25,000 from the total income, so long as such exempt amount ie Rs 25,000 does not exceed 10 percent of your total income.  Further, in the example above, if the total annual income is Rs 400,000, the maximum exemption that could be eligible for the deduction under section 80G would be restricted to Rs 40,000, even though, the amount donated is more than Rs 40,000 in that particular year. 


So go on and donate to make this world a better place to be in.  While you have an income that makes you liable for taxation, a lot others can't even afford basic necessities, such as food, education, employment, medical aid etc.  Do a noble deed.  Feed the hungry, educate the poor child, medicate the unfortunate, aid animal, save a rainforest and if that’s not enough, you also get a 50 percent tax exemption on the donation amount under section 80G of the Income-tax Act.


Disclaimer – Please note that the above information is meant as general guidance and does not constitute any tax opinion or tax advice in relation to the eligible donations and tax exemptions in relation to the same.  Since any tax deduction or exemption including deductibility and tax exemptions in respect of donations would vary on a case to case basis, we would urge you to take appropriate professional assistance in relation to the tax benefits that may be available in respect of specific individual cases. 


You could also contact our tax consultants BMR Advisors for any specific tax advice or opinion as may be required “ –

For details click here.

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