Certain organisations work for welfare of masses. A few of them also start other activities to generate an income to survive on. However, most of these organisations solely rely on the donations made by general public. So, these organisations are able to thrive. However, these donations have come down in the recent past as cost of living has gone up. So, people try to save as much money as possible. Hence, they cut down on donations too. However, if you are planning on cutting down on your donation amount, do not just do so yet. Today, we have brought you a small compilation of sections under Income Tax Act that that let you avail tax deduction on donations. Do read them before you make up your mind.
Tax Deduction on Donations – Relevant IT Act Sections
Under this section, if you donate money to funds like PM Relief Fund, you can claim 100 per cent tax deduction on your donation. If you donate money to institutions promoting family welfare and sports, there are restrictions but even then you can claim 100 per cent tax deduction. For organisations like Rajiv Gandhi Foundation and PM Drought Relief fund, the tax deduction rate is 50 per cent. If you donate money to local authorities, religious institutions for purposes other than family welfare and sports are eligible for 50 per cent tax savings, subject to certain restrictions.
If you do not have any income through business or profession, you can avail tax deduction on donations under this section. However, this is possible only if you donate money to enhance scientific/social/statistical research, which means a fund like National Poverty Eradication Fund is what you should donate your money to.
This section is valid for Indian companies only. Such companies can avail tax deduction on donations they make to a political party. However, this section may have been revised recently, so do your homework in this area.
In case an individual donates money to a political outfit or an electoral trust, he/she can claim tax deduction under this section. However, local authorities and certain individuals will not be eligible for such deductions. Do check if you are eligible to claim deduction on donations under this section or not.