How Donations made to an NGO will save you on Income Tax?

Individuals or Businesses making a donation to an NGO are eligible to deduce the donation amount from the total income; thereby this amount will be exempted under section 80G of Income Tax Act.  This article is intended to explain you the scenarios under which the donation is considered as an exemption.

  1. The amount donated should not exceed 10% of gross total income after subtracting allowable deductions (other than the deduction under section 80G) for the purpose of a tax rebate.
  2. Donations made to various funds set up by the federal or the state government e.g. the National Defense Fund is eligible for 100% tax rebate
  3. Donors contributing towards the repair or renovation of the place of worship would be entitled to a 50% tax rebate when computing their income for tax purposes.
  4. Donations made to a project or scheme notified as an eligible project or scheme for the purpose of section 35AC of the Income Tax Act is eligible for a 100% Tax Rebate.
  5. Any donation done for contribution(s) made to organizations — such as a scientific research institute or a university, college or other institution — approved under section 35(1)(ii) is eligible for 100% rebate

Remember, Receipts of donation collected at NGOs should bear the number and date of the 80G certificate and indicate the period for which the certificate is valid.

We at Wazzeer are fully equipped with CAs who are very well experienced in these matters, we would be happy to help you -> Let’s talk!