Tax deduction on your Donations

1. Why do I get a tax deduction on my donation?

Many of India’s poor live on less than Rs150 a day. This is hardly enough to feed a family of four, take a sick child to hospital or provide education for the poorest of the poor. Credible NGOs provide food, shelter, education and treatment for people who have dire need of it but cannot afford to pay for it. The Government grants economic concessions to registered NGOs who work for the needy, and also to citizens who donate to those NGOs.
 

2. How does the Government register NGOs?

As per the terms of registration, NGOs are mandated to spend 85% of their annual income on programme expenses in a given year.

Those that meet this qualification are granted a 12A certificate which exempts the organisation from paying income tax subject to fulfilment of conditions. NGOs in turn apply to the Income Tax Commissioner for an 80G certificate which enables donors to claim a tax deduction based on their donation. NGOs with an  income of over Rs 2,50,000 a year are required to have their accounts audited by a Chartered Accountant, and are also expected to file their returns with the Income Tax Commissioner each year. Failing to do so can lead to the Government cancelling their registration licence. HelpYourNGO has listed 650+ NGOs with audited financial reports for at least the past three years. You can be assured that these NGOs are compliant with legal requirements and spend their income on beneficiaries.
 

3. What kind of donations can I make?

  • Donations to certain entities are eligible for deduction under section 80G. These include prescribed Government schemes and registered NGOs
Category Name Deduction Qualifying limit on income
Prescribed Government Schemes PM’s National Relief Fund, National Defence Fund, etc. 100% None
Other Government Schemes PM Drought Relief Fund, Rajiv Gandhi Foundation, etc. 50% None
Registered NGOs Click here to find some deserving NGOs 50%, 100% 10% of adjusted gross total income
  • You can claim deductions up to 10% of your adjusted gross total income while donating to NGOs. However, if you are donating to designated Government schemes, there is no qualifying limit
  • Donations made in cash exceeding Rs 2,000 are not eligible for deductions, as are donations in kind (materials, clothes, medicines, food etc.)

4. How do I claim my deduction?

Charitable donations are accounted for under section 80G of the Income Tax Act.

  • Ensure that the NGO gives you a receipt and 80G certificate when you make your donation.
  • When filing your returns, include the following details: Name and address of donee, PAN of done and amount of donation. Based on the details, the amount eligible for deduction will be calculated.

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