During the financial year an employee may have donated certain amount out of his salary to a trust or any other institutions for charity. Such donation can be claimed as tax deduction only if it is donated to a trust or institution which is approved by government of India to receive donation under section 80G of the Income Tax Act, 1961.
Now the question is how to claim tax deduction u/s 80G.
Certain tax deductions can be claimed by submitting proof of donations to your employer and in some other cases donations can only be claimed by the individual while filling tax return.
Deduction on Donation through employer
Following donations can be claimed as a tax deduction by submitting the proof of payment to the employer, if its donated through your employer;
- Prime minister national relief fund
- Chief minister relief fund
- lieutenant governor’s relief fund
In cases where employees are contributing to these funds through their employer, it is not possible for such funds to issue separate certificate to each employee who has contributed to such funds as contributions are in the form of a consolidated cheque.
All employees donated to such fund can claim tax deductions under section 80G through their employer.
Such donations will be part of your form 16 on the basis of which you can file IT return. In this case, certificate issued by the employer will be considered as proof of payment.
Deductions on Donation through tax return
Employees donated on their own can not claim tax benefit by submitting the payment receipt to their employer.
To claim such deductions you need to mention it while filling your income tax return.
You need not submit the receipt or any other proof for your donations along with your return. You need to retain the proof payment as it will be required in case assessing officer asked for such proof.
Other relevant points to claim deduction U/S 80G
- Donations above Rs. 10, 000 should be paid through a cheque. If it is paid in cash then such amount cannot be claimed as tax deduction under section 80G of IT act.
- Before donating please ensure that the fund or institution is approved by government to claim deduction under section 80G. You can verify it from 80G certificate is issued by IT department to the fund or institution.
- The receipt should contain
- Name and address of the trust
- PAN of the trust or institution
- Your name
- Registration number
- Validity period of registration
- No maximum or minimum amount is specified under section 80G but deductions in certain cases are limited to 10% of the gross total income.
A self employed person in all cases can claim tax deductions while filling his annual IT return.
They need not attach donation proof while filling IT return. However such proof has to be produced before the assessing officer if it is asked for.
Recommended Read: Detail provision of Section 80G of IT act.