Ashok Shah, senior partner, NA Shah Associates, says: “Donation to some specified funds is eligible for 100 per cent or 50 per cent deduction without any limit linked to the qualifying amount. However, a donation to a certain charitable organisation is allowed deduction at 50 per cent of the amount donated or 10 per cent of the adjusted total income, whichever is lower.” Also, only financial donations qualify, food or clothes do not get any benefits.
Surana says: “The taxpayer shall aggregate all the donations made to the eligible funds, institutions as mentioned in both the categories (deductions eligible for 100 per cent and 50 per cent category) subject to qualifying limit. The aggregate amount is then compared with 10 per cent of Adjusted Gross Total Income (AGTI), and the lower of the two amounts is the maximum permissible limit. Further, the first deduction for the eligible donations to 100 per cent eligible projects shall be given first.”
Keep in mind that the qualifying limit refers to the restricted amount of deduction that can be claimed by an assessee. In respect to Section 80G of the Act, the qualifying limit is again 10 per cent of the Adjusted Gross Total Income for donations that qualify for 50 per cent deduction, subject to qualifying limit. The balance of the maximum permissible amount is to be considered, and 50 per cent of the balance amount is the deduction, which is eligible under this category, is subject to such qualifying limit. Donation under Section 80G can be made in any mode cheque, cash, drafts, electronic transfer, UPI transfer and others. However, cash above Rs 2,000 is no longer allowed as deduction.
Then, there are special donations as well. If you plan to donate for scientific research and rural development, you need to keep in mind that Section 80GGA of the Act provides for deductions from GTI.
Shah adds: “Taxpayers, not having any business income, can claim a deduction of the entire amount towards donation made to specified institutions.”
However, you need to keep proof of payment. Surana says: “Receipts received from the institution with details such as name and address of the institution, donor name, amount and registration number issued by the income tax department need to be produced. This may be required in future if the case is taken up for income tax assessment. Further, the details regarding name, PAN, address of donee and amount would be required to be filled up in the income tax return.”