To encourage the donation the government of India also provides opportunities for tax benefits to the donors. One of the most important act in this regard is section 80g of the income tax act, 1961 which enables individuals and organizations to deduct donations pointed to in it.

Key Provisions

Under section 80g, a donation to specified trusts, funds and charitable institutions is eligible for a tax deduction. The limit of the deduction to be allowed to donors depends on the nature of the organization, where the donor can claim 50 % or 100 % of the donation limit. The organization to which the donation has been given should have an 80g certificate issued by the income tax department.

Competence and Conformance

Only individuals and corporate bodies are authorized to get the 80g deductions granted, as long as the mode of payment is by cheque/draft or an online transfer. Donations in the form of cash over a stipulated amount are not crafty. Donors should find out whether the receiving organization is in line with the registration and reporting standards.

Importance

Section 80g tax serves two purposes it provides an incentive to donate funds to charities/nonprofit organizations and encourages donors by giving them financial benefits and it also helps the nonprofit organization by increasing credibility and funds available to the organization. It is a provision that, in the end, supports social development as it encourages a culture of responsible giving.