As a taxpayer, if you donate to give back to the society and simultaneously get an income tax deduction under Section 80G of the Income Tax Act, 1961, now, you will not have to bother about procuring relevant records to claim tax benefit from the next financial assessment year. Budget 2020 has shifted the responsibility of supplying details of the value of the donation and the donor from the individual taxpayer to the charitable establishment to which the contribution is made.
To promote the idea of benevolence, the state allows donors to avail donation tax exemption under Section 80G. The donation tax exemption is permitted on contributions made to several funds and charitable associations recognised and registered by the Income Tax Authorities. A taxpayer can petition 100% or 50% of the amount, depending on the charitable establishment. However, there is a limit to the amount of the contribution which is made in cash. For so long, you could avail donation tax exemption using the voucher issued by the charitable establishment to which you have donated. Also, now, these NGOs/institutions are expected to register only once under Section 80G to be qualified to issue vouchers to donors who need to produce them while filing their Income Tax Returns.
To be covered under Section 80G, charitable establishments will have to get their permission renewed every five years. Previously, they just needed to do a one-time certification and the licence had no expiry date. Under the current management, blanket approval is conferred under Section 80G regarding the period of the legality of the certificate. However, based on the amendment proposed by Budget 2020, even existing charitable establishments registered under Section 80G will need to apply for approval with the tax authorities and the license will be valid for five years only.
It is important to note that if you opt for the latest tax regime introduced by the state, you will not get the discount benefit under Section 80G; you will continue to get the benefit under the former tax regime. The latest tax regime has lower tax slab valuations but has also dismissed the common deductions and including donation tax exemption under Section 80G that assist in reducing the taxable income. The new schemes will ease the strain on the taxpayer to collect pertinent details required to claim deduction under Section 80G, but the taxpayer will have to be even more cautious about choosing the charitable establishment.
Donation is the best way to make a difference in the lives of the underprivileged; therefore, it is your responsibility to make sure that your donation makes a difference by rightly donating to an authentic charitable organisation! Save the Children is one such NGO in India that has dedicated themselves to the betterment of the downtrodden children of the nation. Donate money to Save the Children because what you’re helping build, apart from a few children’s lives, is also your nation’s future.