Save Tax & Make An Impact With Section 80G Deductions

Grinding with grit and sweat for 9 hours a day, 6 days a week, 4 weeks a month and 52 weeks a year only for a sweet part of your earnings to be taken away by the claws of that mandatory Income Tax machine! Surely no one loves watching fractions of their hard-earned incomes being pulled away like that.

But what if there’s a hack to unlock tax deductions while also making an impact with acts of charity? With certain provisions of the Income Tax Act and guided knowledge, you can do so with deductions!

Want to make a difference using your wealth while also saving taxes simultaneously? Read on to learn how you can save tax online with the best donations for tax deductions in India.

NOTE

Information related to taxation, deductions and related topics present in this blog has been curated from multiple sources. Owing to the dynamic nature of Income Tax regulations and the guidelines prescribed thereinafter, certain sections or points mentioned in the following text may need a reference to an updated source. Kindly refer to the latest directives and notifications from the Income Tax Department for detailed information.

Deductions - The Delight Of Donations

It’s common for Income Tax Terms like “Deductions ” to sound technical and confusing to unaware ears. So, let's break down what tax deductions are and how they can you maximise tax deductions with donations.

Tax deductions are expenses or investments that you can subtract from your total income to reduce the amount of income that is taxable. Simply said, deductions under the Income Tax Act help lower your taxable income, which in turn reduces the amount of tax you have to pay.

For Example, if you invest in a Public Provident Fund (PPF) or pay premiums for life insurance, these amounts can be deducted from your total income before calculating the tax. That’s how deductions help save taxes by reducing your overall taxable income. 

Before moving ahead, let’s take a look at some short examples of deductions:

• Section 80C Deductions: This is one of the most popular deductions. You can claim up to ₹1.5 lakh for investments in instruments like PPF, NSC, life insurance premiums, and more.
• Home Loan Interest: If you have a home loan, you can deduct up to ₹2 lakh on the interest paid for a self-occupied property.
• Section 80D for Health Insurance: You can claim deductions for medical insurance premiums for yourself and your family.
• Section 80G for Donations: Donations to specified charitable institutions can also be deducted from your taxable income.

Let's say your total income is ₹10 lakh, and you invest ₹1.5 lakh in a PPF under Section 80C. Your taxable income would then be ₹8.5 lakh (₹10 lakh - ₹1.5 lakh). This reduces the amount of tax you pay because your taxable income is lower.

Therefore, when making generous donations to eligible institutions, you can claim deductions on the donated amount and have your taxable income reduced to the extent allowed under the Income Tax Act.

Section 80G - Best Donations To Claim Deductions & Save Taxes In India

Out of the many tax deductions available to taxpayers in India, Section 80G donation deductions are widely regarded as the most effective and highly recommended ones. That’s because Section 80G of the Income Tax Act helps you save on taxes while giving back! It offers deductions for donations to eligible charities and institutions. You can undertake up to a 100% tax-deductible donation, depending on where you give. Just remember to get a receipt with the right details, and you're good to go!

Additional Notes:

• Eligible Taxpayer: Individuals, Companies, Non-Resident Individuals (NRIs) and Hindu Undivided Families (HUFs).
• Donation Modes: Donations exceeding ₹2,000 must be made via cheque, draft, or electronic transfer to qualify for deductions.
• New Tax Regime: Deductions under Section 80G are not available if you opt for the new tax regime (115BAC).
• Registration: Institutions must be registered under Section 80G to qualify for deductions. Check the list of organisations eligible for tax deductions under 80G to be sure.

How To Claim Deductions To Save Tax?

For a brief understanding, underneath is a step-by-step guide on how to save taxes using deductions in India:

Step 1: Understand Your Income and Tax Regime

Gross Income: Calculate your total income from all sources, including salary, investments, and any other earnings.
Tax Regime: Decide whether you want to opt for the old tax regime or the new tax regime. The old regime allows various deductions, while the new regime offers lower tax rates but fewer deductions.

Step 2: Identify Available Deductions

• Section 80C: Investments up to ₹1.5 lakh in instruments like PPF, EPF, ELSS, life insurance premiums, and tuition fees.
• Section 80CCD(1): Contributions to the National Pension Scheme (NPS) up to ₹50,000.
• Section 80D: Health insurance premiums for yourself and family members.
• Section 80G: Donations to specified charitable institutions.
• HRA (House Rent Allowance): Partially exempt if you live in rented accommodation.
• Standard Deduction: ₹50,000 for salaried employees.

Step 3: Calculate Deductions

1. Section 80C Deductions:
   • Add up all eligible investments and expenses under this section (e.g., PPF, EPF, ELSS).
   • Ensure the total does not exceed ₹1.5 lakh.
2. Section 80CCD(1) Deductions:
   • If you contribute to NPS, you can claim an additional deduction of up to ₹50,000.
3. Section 80D Deductions:
   • Calculate health insurance premiums paid for yourself and your family.
   • Check the age-based limits for deductions.
4. Section 80G Deductions:
   • Calculate donations made to eligible charitable institutions.
   • Check if the donation qualifies for a 50% or 100% deduction.
5. HRA Exemption:
   • Calculate the exempt amount based on actual rent paid, salary, and city of residence.
6. Standard Deduction:
   • Claim ₹50,000 if you are a salaried employee.

Step 4: Calculate Taxable Income

• Subtract all deductions and exemptions from your gross income to get your taxable income.

Step 5: Apply Tax Slabs

• Use the tax slabs applicable to your chosen tax regime to calculate your tax liability.

Step 6: File Your Income Tax Return (ITR)

• Log in to the Income Tax e-Filing portal and fill out the ITR form applicable to you (e.g., ITR-1 for salaried individuals).
• Ensure all deductions are correctly entered in the relevant sections.
• Submit your return and verify it to complete the process.

Additional Tips

• Keep Records: Maintain receipts and documents for all deductions claimed.
• Consult a Tax Advisor: If needed, seek professional help to ensure accuracy and maximise deductions.
• Use an 80G Tax Exemption Calculator: If claiming 80G Deductions, use an online donation tax benefit calculator for precision.

With these systematic steps, you can use deductions to reduce your taxable income and save on taxes.

Donation Receipt & Documentation For Deductions

Proper documentation is the key to claiming tax deductions on donations. Keep the following points in mind to claim hassle-free tax deductions:

How to Get a Tax Receipt for Donations

For Individuals:

1. Donate to Eligible Institutions: Check if the organisation is registered under Section 80G of the Income Tax Act.
2. Request a Receipt: After making a donation, ask the institution for a receipt. This can be done in person, via email, or through their website.
3. Verify Details: Ensure the receipt includes all necessary details (discussed later).

For Businesses:

1. Check Eligibility: Confirm the recipient organisation is eligible for tax-deductible donations.
2. Maintain Records: Keep detailed records of donations, including receipts and any communication with the recipient.
3. Claim Deductions: Use these receipts to claim deductions in your business tax return.

80G Donation Receipt Details For Tax Exemption (Sample)

• Donor’s Name: [Your Name]
• Donor’s Address: [Your Address]
• Donor’s PAN: [Your PAN Number]
• Date of Donation: [Date]
• Amount of Donation: ₹[Amount]
• Mode of Payment: [Cheque/DD/Online Transfer]
• Recipient’s Name: [Name of the Institution]
• Recipient’s Address: [Address of the Institution]
• Recipient’s PAN: [PAN of the Institution]
• 80G Registration Number: [Registration Number]
• Signature: [Signature of Authorized Person]

Importance of Tax Receipts

Keeping donation receipts is extremely important because they serve as proof of your donation when claiming tax deductions. Without a valid receipt, you may not be able to claim the deduction, which could result in a higher tax liability.

What Information Should Be on the Receipt?

A valid tax receipt should include the following details:

• Donor’s Information: Name, address, and PAN number.
• Recipient’s Information: Name, address, PAN number, and 80G registration number.
• Donation Details: Date, amount, and mode of payment.
• Signature: Signature of an authorised person from the recipient institution.

By checking if your donation receipts include these details, you can confidently claim tax deductions and support your charitable contributions.

Contribute Towards Emerging Temples - The Best Charities For Tax Deductions

If you’re on this page, looking for tax-saving donations in India, it’s very likely that the Lord has blessed you with meaningful wealth and resources. Why not take this opportunity to get 80G tax deductions while also dovetailing a part of your wealth towards serving the Lord Himself by contributing to the construction of his magnificent temple!

Donations towards the construction of temples and cultural centres like Gupt Vrindavan Dham or the Hare Krishna Temple (Jaipur) are undeniably and undoubtedly the best charities in India for numerous reasons, the best of them being the following:

• Your donation gets used to build spiritual centres like the present-day HKM Jaipur that preserve and foster the authentic roots of our culture.
• Your donation contributes towards touching the lives of millions of souls with pure spirituality and divine grace. 
• Temples like the Gupt Vrindavan Dham fruitfully use your donation for activities like Annadaan and Gau Seva instead of wasting your wealth on mundane activities.
• As a registered institution fulfilling 80G tax exemption rules, donations towards the construction of Gupt Vrindvan Dham are eligible for tax deductions.
• Not only do you receive the satisfaction of making an impact, but such spiritual contributions also earn you positive karma, as described in the Shrimad Bhagwatam.
• As a contributor to the temple, you receive several benefits from Gupt Vrindavan Dham, including home delivery of delicious prasadam of Lord Shri Krishna, energised Narasimha Kavach Thread to invoke the divine protection of Lord Narasimha for you and your family, and multiple additional benefits that can not be earned at any place else!

By supporting emerging temples like Gupt Vrindavan Dham, you are not only fostering spiritual growth but also benefiting from the tax incentives provided by the government. So,whats stopping you from using your generosity and wealth to bloom into a beacon of hope and prosperity, both spiritually and financially?

Just chant Haribol and start with a Square Foot! It’s that simple!!

Frequently Asked Questions

Q1. How do I get a tax receipt for a donation?

Ans. You can request a receipt from the charitable organization after making your donation and verify if it contains all necessary details.

Q2. What documents do I need to claim tax deductions for donations?

Ans. Apart from basic documents, you need the donation receipt and, if applicable, Form 10BE from the institution confirming the donation details to claim tax deductions.

Q3. Are donations to religious organisations tax-deductible?

Ans. Temple donations and donations to similar NGOs are eligible for tax deductions only if Section 80G deduction rules are fulfilled.

Q4. What are the best tax-exempt donations?

Ans. Donations to cultural centres that perform meaningful activities on a large scale, like the Gupt Vrindavan Dham in Jaipur and the Vrindavan Chandrodaya Mandir, are some of the best charities for tax deductions.