20 Smart Ways to do any Charity

**Secrets from the closet of a Tax attorney**

Read on….Some rich guys have contributed millions to ‘give back’ to their Alma mater.


I came across this piece of news sometime back and then by a divine coincidence I managed to read/hear more and more of such awesome acts of altruism.Was I ‘attracting’ such news ?

And though I appreciate from the bottom of my heart such acts of selfless donations and contributions,the lawyer within me can’t seem to miss an awesome financial sense behind such acts of charity too.

So,although the naive amongst us roll down our car windows and hand out a few coins to the frail looking beggar on practically every signal in Indian cities (which by the way is a contribution to a parallel economy financing drugs,flesh trade etc. – more on this some other day);the “smart”and “charitable” have an altogether different way of helping the nation and themselves too. They are the CHARISMART.

A lawyer doesn’t give away anything for free except his visiting card

However I am doling out this advise for free.Don’t know why.But you might as well make hay while sun shines.

So here it goes.

The Income tax act 1961 which ‘charges’ you tax on the income #Incometax also provides for statutory ‘Deductions’ which would be subtracted from your Gross Total Income before the Net Taxable Income is calculated.

For the sake of this article we will look at Deduction under the head of ‘Donations’.

A quick look at IT act 1961 relevant provisions for rebate for Donations –

  • IT Rebate for Donations under section 80 G of the Income Tax Act, 1961

Donations for charity come under section 80 G of the Income Tax Act, 1961. This section has classified charity funds under various heads, each of which give the donor a different kind of tax rebate. However, please remember, that for all charity donations the deductions are made directly from the gross total income of the assessee.

The contributions for charity fall under two broad categories :-

A) Those where the total sum donated is deductible from the assesse’s gross income. These donations would be more beneficial to you, in case you wish to donate for charity.

B) Those where only 50% of the amount donated will be deducted from total income.

Category (A)

According to the section 80 G these funds where 100% of the amount donated can be deducted are :-

  • The Prime Minister’s National Relief Fund.
  • The Prime Minister’s Armenia Earthquake Relief Fund.
  • The Africa (Public Contributions-India) Fund.
  • The National Foundation for Communal Harmony.
  • A University or any educational institution of national eminence as maybe approved by the prescribed authority. Please note that the prescribed authority in the case of a university or non-technical institution. Of national eminence is Director-General (Income-Tax exemption) in concurrence with the Secretary, University Grants Commission. In the case of any technical institution of national eminence the prescribed authority is the Director General (Income-Tax Exemption) in concurrence with the Secretary, All India Council of Technical Education.
  • The Maharashtra Chief Minister’s Earthquake Relief Fund.
  • Any Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district for the purpose of improvement of primary education in villages and towns in such a district and for literacy and post literacy activities.
  • The National Blood Transfusion Council or any State Blood Transfusion council whose sole objective is the control, supervision, regulation or encouragement in India of the services related to operation and requirements of blood banks.
  • Any fund set up by a State Government to provide medical relief to the poor.
  • The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund established by the armed forces of the Union for the welfare of the past and present members of such forces or their dependants.
  • The National Illness Assistance Fund.
  • The Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund in any State or Union Territory.
  • The Government, or any local authority, institution or association as maybe approved by the Central Government for the purpose of promoting family planning.

Category (B)

The funds under which donations will qualify for deductions only upto 50% of the amount donated are :-

  • The National Defence Fund set up by the Central Government.
  • The Jawaharlal Nehru Memorial Fund.
  • The Prime Minister’s Drought Relief Fund.
  • The Indira Gandhi Memorial Trust.
  • The Rajiv Gandhi Foundation.
  • The National Sports Fund to be set up by the Central Government.
  • The National Cultural Fund.
  • The fund for Technology Development and Application set up by the Central Government.

There’ more…….

Section 80GGA

Section 80GGA allows deductions for donations made towards scientific research or rural development.

This deduction is allowed to all assessees except those who have income (or loss) from business and profession.

100% of the amount that is donated or contributed is considered eligible for deduction.

Eligible donations under Section 80GGA:

  • Sum paid to a research association which undertakes scientific research, or sum paid to a college, university or any other institution to be used for scientific research and these are all approved by the prescribed authority under section 35(1)(ii)
  • Sum paid to a research association which undertakes research in social science or statistical research or sum paid to a college, university or any other institution to be used for the same purpose and these are all approved by the prescribed authority under section 35(1)(iii)
  • Sum paid to approved association or institution which undertakes any program of rural development and is approved under section 35CCA
  • Sum paid to an approved association or institution which undertakes trainings of persons for implementing programs of rural development
  • Sum paid to a public sector company, local authority or an approved association or institution which carries out project or scheme approved under section 35AC.
  • Sum paid to notified Rural Development Fund
  • Sum paid to notified Fund for Afforestation
  • Sum paid to notified National Poverty Eradication Fund

If a deduction has been allowed under section 80GGA, such expenses shall not be deductible under any other provision of the income tax act.

Take Away-

As shown there are multiple avenues which need your support financially and in the process the State rewards you by reducing your tax liability.

Take your pick- Education,Defence,Technology,Health,Disaster management..the list is long.

So next time you are tempted (or inspired) to make a contribution to charity forget the traffic signal.

Contribute effectively towards whatever National or Charitable cause you believe in But do not forget to make use of aforementioned taxation laws which will reduce your tax liability.

That’s what I call being CHARISMART.

Until next time.

Adv.Sidharth Arora

Supreme Court