Charitable Contributions Deduction

Reviewed by Sweta | Updated on Aug 27, 2020

Introduction

Charitable contributions deduction refers to a deduction on the account of donations made towards charity. The donations may be made to charitable organisations or non-profit organisations carrying on charitable activities.

What is Charitable Contributions Deduction?

The donations or contributions made should be monetary in nature. In certain cases, the whole of the donations or contributions qualify as a deduction. In other cases, the qualifying deduction is restricted to 50% or as a percentage of the gross total income of the taxpayer.

Charitable organisations include temples, churches and mosques who carry on both charitable and religious work. Charitable organisations also include non-profit organisations such as educational institutions, sports academy, animal welfare organisations and other community development organisations. These contributions can also be made towards orphanages, old age homes or women and child care organisations.

In India, certain funds notified by the central government qualify for 100% of the deduction, while other funds or organisations qualify for a 50% deduction. Also, these other organisation should seek and obtain approval as a charitable organisation under the income tax law.

Who is eligible to pay?

For the purpose of claiming the deduction, the recipient organisation must be certified by the revenue authorities as a charitable organisation. The organisation must issue a receipt for the donation bearing the approval number received from the revenue authorities. The details of the receipt should be submitted by the contributing taxpayer while filing the income tax return. The receipt is the evidence of the contribution and the deduction claimed thereon.

A detailed breakdown of the procedure for filling the tax

While filing an income tax return in India, a taxpayer should submit the PAN (Permanent Account Number) of the donee, name and address of the donee, and the amount contributed in addition to the qualifying amount.