How To Save Tax by Donating to NGO – Get Tax Exemption Under 80G

How To Save Tax

Paying taxes is our responsibility, but saving them wisely is smart planning. One of the best ways to do that is by donating to a registered NGO. When you contribute to a charitable cause, you not only help society but also enjoy tax benefits under Section 80G of the Income Tax Act. Let’s understand how this works and how you can make a difference while saving money.

1. What is Section 80G?

Section 80G of the Income Tax Act allows you to claim a deduction for donations made to approved charitable institutions. This section was introduced to encourage more people to support social welfare causes.

If the organisation you donate to has a valid 80G certificate, you can claim a part of your donation as a deduction while filing your income tax return. This helps reduce your taxable income and, in turn, your overall tax liability.

2. How Much Tax Can You Save?

The amount of tax you can save depends on the type of institution you donate to. The Income Tax Department divides donations into two main categories:

1. 100% Deduction – Full amount of donation is eligible for deduction.
2. 50% Deduction – Half of the donation amount can be claimed.

For instance, if you donate ₹10,000 to a charitable organisation that qualifies for a 50% deduction, you can reduce your taxable income by ₹5,000. This means you will pay tax only on the remaining amount, helping you save effectively.

3. Who Can Claim Tax Exemption?

Any taxpayer—whether an individual, company, or firm—can claim this benefit. The only conditions are:

• The NGO must be registered under Section 80G.
• Donations above ₹2,000 must be made through cheque, draft, or online mode (cash donations beyond this limit are not allowed).
• You must collect a valid donation receipt from the organisation.

4. Documents Required For Tax Benefit

To claim your deduction under Section 80G, make sure you have the following:

1. Donation receipt with your name, amount donated, and date.
2. The PAN and 80G registration number of the organisation.
3. Mode of payment (Cheque, UPI, Bank Transfer, etc.).

These documents serve as proof when you file your income tax return and ensure that your claim is accepted.

5. Simple Example To Understand

Suppose your annual income is ₹8,00,000 and you donate ₹20,000 to a registered NGO that offers a 50% deduction.

• Eligible deduction = ₹10,000 (50% of ₹20,000)
• New taxable income = ₹8,00,000 – ₹10,000 = ₹7,90,000

This reduces your taxable amount, leading to a lower tax bill. So, you help society and also save money legally.

6. Why You Should Donate?

When you contribute to a good cause, the impact goes beyond numbers. Your support helps fund education, Food, healthcare, women empowerment, and environmental projects. Charitable donations build stronger communities, provide hope to those in need, and promote equality in society.

Every rupee donated has a purpose—it may educate a child, provide medical help and food to a poor family, or plant trees for a greener tomorrow.

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7. How To Claim The Deduction

Follow these easy steps to claim your benefit under Section 80G:

1. Donate to a registered NGO through an approved payment method.
2. Collect and verify your donation receipt.
3. Check the deduction percentage (50% or 100%) allowed for the organisation.
4. Enter details while filing your Income Tax Return under “Deductions – Section 80G.”

8. Key Rules To Remember

• Always donate before 31st March to claim the deduction in the same financial year.
• Cash donations exceeding ₹2,000 are not eligible for deduction.
• If you are under the new tax regime, most exemptions, including 80G, may not apply.
• Keep the original receipts safe for any future verification by the tax department.

9. The Double Benefit of Giving

Donating to a charitable organisation benefits both you and society. You get a sense of satisfaction knowing your contribution is changing lives, and you also receive a lawful reduction in your tax liability.

This is truly a win-win situation—your act of kindness supports a noble cause while easing your financial burden.

Conclusion

Tax saving through donations is one of the most meaningful ways to give back to society. Instead of spending your hard-earned money only on taxes, let a part of it help someone in need. By donating to an approved NGO, you create a positive impact and enjoy the advantage of tax exemption under Section 80G.

So, the next time you plan your finances, remember that generosity pays—both emotionally and financially. Give with a kind heart, claim your 80G benefit, and take pride in contributing to a better and more compassionate world.

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