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The Income Tax Act of 1961 allows certain deductions to taxpayers. These deductions are allowed to reduce the tax liabilities of taxpayers. The section 80G of this act addresses such deductions. In this article, we will discuss the deduction under section 80G that can be availed by the taxpayers.
The deduction is allowed from the total income of the assessee and tax is calculated on the net income after deduction. Let us understand both of the sections individually.
Under Section 80G tax rebates are allowed to taxpayers for donations made to charitable organizations. The limit on the amount of deduction depends upon the organization to which donation is made.
This deduction is allowed to encourage donations on the part of taxpayers for the benefit and development of the society.
The section 80G of Income Tax Act 1961 serves dual benefits for society. Primarily it reduces the tax liability of the taxpayers and provides them with a chance to invest that money in charitable and social development cases.
On the other hand, it acts as a pillar for activities carried out for social development. Donations from taxpayers create a large fund for social organisation.
Owing to such donation, these organisations can carry their work of social development.
The limit of deduction allowed to taxpayers under this section is basically divided into 4 categories as under:
100% deduction is allowed against a donation made to specific government-specified charitable organizations. One can avail the whole amount as a rebate, which has been paid as a donation.
Some of the government specified charitable organizations are as under:
Donation made to the following organizations will qualify for 100% deduction subject to a specific limit:
Donation made to the following organizations will qualify for a deduction of 50% of the total amount without any maximum limit:
Donation made to the following organizations will qualify for a 50% deduction subject to a maximum limit:
Following items should be deducted from total income to calculate Gross Total Income:
The following assesses are eligible to avail deduction under section 80G
However, in certain cases only companies are eligible.
In order to avail deduction under section 80G, the donation has to be made in cash and not in kind. Donation in kind does not qualify for deductions.
Further, the mode of payment should be either through cheque, demand draft or cash. However, if cash is paid, then a maximum limit is imposed on the amount that can be paid through cash.
Every deduction under section 80G not only reduces the tax burden of taxpayers but also play a significant role in the development of society.
Such donation is helpful to achieve common goals of development of society and nation.
However, one should be very cautious at the time of filing for such deductions. Giving wrong information can attract a penalty for the taxpayer.