Apart from investments and expenses, even donations to specific institutions can be exempt from income tax, while filing returns. But before you donate, check whether the institution is an exempted institution. These can include: trusts, non-government organisations, non-profits and charitable institutions.
For your donation to qualify for deductions, these institutions have to be registered under various sections of Income-tax Act, 1961. For added security, verify the permanent account number (PAN) of these institutions as well.
Relevant Sections
These institutions are registered under different sections of the Act, depending on the nature of their work. Here are a few of these sections:
Section 80G: Primarily for charitable institutions and relief funds.
Section 12A: Properties held for charitable purposes.
Section 10(23C)iv: Funds or institutions with charitable objectives of national or state importance.
Section 10(23C)(v): Trusts or institutions for public, religious or charitable purposes. Also, hospitals or other institutions existing solely for philanthropic purposes.
Section 10(23C)(vi): University or educational institution existing solely for educational purposes.
How to check
You can check before donating, to know for sure if the organisation is registered as an exempt organisation. Log on to the income tax website: www.incometaxindia.gov.in. Under the 'Important Links', click on the 'Exempted Institutions' link. You will be directed to a list of all the exempt institutions registered under the above-mentioned sections.
As on 22 November, there were 9,766 institutions registered as exempt institutions under the various sections. There is a search engine alongside this list and you can refine your search.
The exempted institutions here are listed along with their various details like registered address, approval status, jurisdictional details, date of order, date of withdrawal, cancellation or expiry.
So before you make any donation check the status of the organisation. If you don't find it in the above-mentioned list, your donation to the institution may not qualify as a deduction in your tax return.
Things to remember
Exemption limits on donation can vary depending on the institution and the section under which it is registered. For instance, a donation to the Prime Minister's National Relief Fund qualifies for 100% deduction, but a donation to the Jawaharlal Nehru Memorial Fund qualifies for 50% deduction.
You are free to make donations through cheque, draft and cash but cash donations above a certain limit do not qualify for deductions.
When you make a donation to any institution, make sure you collect a receipt for the same. The receipt should contain the name and PAN of the institution. You need to mention these while filing your return.
Knowing the status of your institution helps, but some times it's alright to donate to a good cause that may not necessarily be exempted.
In arrangement with HT Syndication | MINT
This article was originally published on December 05, 2016.
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