Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: due date for vat payment :: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd :: ACCOUNTING STANDARDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: empanelment :: VAT RATES :: articles on VAT and GST in India :: TDS :: cpt :: VAT Audit :: ACCOUNTING STANDARD :: Central Excise rule to resale the machines to a new company :: ARTICLES ON INPUT TAX CREDIT IN VAT
 
 
« News Headlines »
 Govt extends service tax return filing date to April 30
 No move to tax farm income, clarifies Arun Jaitley
 New board for indirect taxes to become operational from June 1
  9 changes that came into effect from April 1
 First time filing income tax? Here's all you need to know about Form 16 and Form 26AS
 New Opening Financial Controller Chartered Accountant (Manufacturing Plant) A Leading Company
 Income Tax Filing 2017: All you want to know about the single page ITR form SAHAJ
 How to benefit from investments in tax saving mutual funds
 60 per cent of income tax notices on fishy cash deposits returned
 All about income tax return form Sahaj
 Why seeing Form 26AS is a must before filing tax return and how to access it

A good deed can keep taxman away
January, 04th 2008
Did you know donations are not only good karma, but can also give tax relief? Ernst & Youngs Mayur Desai & Umang Shah tell you how to make use of generosity.

The tax laws are kind to those who donate. Yes, if you have made a donation in cash (not kind), you should examine the provisions of section 80G of the Income Tax Act, 1961, which may provide you some tax relief. You should understand two elements: basic prescribed limit and limits for individual donations.

Basic prescribed limit: The maximum amount that you can donate to eligible charities, to get tax benefits is limited to 10% of your gross total income reduced by other deductions available under the Act (from section 80C to 80U), which are wide ranging and include PF contribution, LIC premium to name a few. However, certain donations, like those to the National Defence Fund and PMs National Relief Fund are not subject to this limit.

Limits for individual donations:

Further, the quantum of tax deduction also depends on the institution to which the donation is made. Not all donations are eligible for a 100% tax relief. For instance, if you have donated to a local orphanage, which has obtained an 80G approval, only 50% of the donation would be subject to tax relief. Further, it would also fall within the basic prescribed limit criteria (refer table).

Let us consider an illustration. Sharon decided on an impulse to donate to a local orphanage. Fortunately, the orphanage had got an 80G approval entitling her to claim the tax break. But Sharon could only get a part of the donation as a tax break. Here is the math:

Her gross total income, as explained above, was Rs 5 lakh. She made a donation of Rs 1 lakh. However, 10% of her gross total income works out to just Rs 50,000. Against this Rs 50,000 (which is the maximum limit up to which she can claim a deduction, even though her actual donation is Rs 1 lakh), she will get a deduction of only 50%. Thus the deduction for her will be Rs 25,000.

However, if Sharon had purchased furniture, she would have lost out on this limited benefit. Donations in kind are not eligible for deduction under the Act. Sharon should also ensure that she gets the receipt of the donation given by her, and also obtain a copy of the certificate under section 80G of the Act. There has been one major change in the tax laws relating to donations. With effect from April 1, 2006, the government has taken steps to restrict secret donations. This is done by enacting specific provisions to deem the anonymous donation as income taxable at a maximum marginal rate of 33.99% in case such donation is got by a university, educational institution, hospital or trust. It appears that this amendment can curb flow of unaccounted money.
 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Company Overview

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions