How To Save Tax By Donating to NGO: Common Mistakes to Avoid

Tax planning is an important part of financial management, and many taxpayers look for ways to reduce their tax liability while also contributing to meaningful causes. Donating to a registered NGO is one such option.

However, while charitable donations can provide tax-saving benefits, several people make mistakes that prevent them from claiming deductions or create complications during tax filing. Understanding the right process can help you make your contribution more impactful while ensuring you receive the eligible benefits. In this blog post, we will take you through steps on how to avoid common mistakes when availing tax benefits by donating to NGO.

How To Save Tax by Donating to NGO?

Under Section 80G of the Income Tax Act, eligible donations made to certain registered charitable organisations can qualify for tax deductions. Depending on the NGO’s eligibility, donors may be able to claim deductions ranging from 50% to 100% of the donated amount. This provision allows one to save the money one spends on tax while at the same time supporting a noble cause. However, to ensure that your donation qualifies for a deduction, it is essential to follow the correct procedure and avoid common errors.

Save Tax by Donating to NGO: Common Mistakes to Avoid While Claiming Tax Benefits

1. Donating Without Checking the NGO’s Eligibility

One of the most common mistakes taxpayers make is donating to an NGO without verifying whether it qualifies for tax deductions under Section 80G. Most NGOs or charitable institutions are not registered under the Section 80G of the IT Act and hence are not eligible for providing tax benefits to donors.

Before you make a donation to NGO, always check whether the organisation has a valid 80G registration. For example, NGOs like Genesis Foundation are registered under the 80G Act and ensure that your contribution reaches a genuine cause while helping you avail tax benefits.

2. Not Keeping Proper Donation Receipts

A donation receipt is an essential document when claiming tax deductions. Many taxpayers forget to collect the 80G donation receipts, which can create issues while filing income tax returns.

A valid 80G donation receipt typically includes the following details:

• Full Name of the Trust/NGO receiving the donation
• Complete address of the organization
• Permanent Account Number (PAN) of the organization
• 80G Registration Number, along with the validity period
• A unique receipt number for tracking
• Date of Donation
• Details of the donor
• Amount donated
• Mode of Payment
• Signature of the authorized person from the organization

3. Assuming Every Donation Qualifies for 100% Deduction

Another common misconception is that every charitable contribution automatically qualifies for a 100% tax deduction. This is not true. Depending on the organization you are donating to, you can claim a deduction of up to a maximum of 50% or 100% of the donated amount. For example, at Genesis Foundation, you can claim 50% tax exemption. Therefore, it is advisable to understand the conditions associated with claiming tax benefits before you donate to any NGO.

4. Failing to Report Donations Correctly in the Income Tax Return

Some taxpayers forget to include the details while filing their income tax returns. The deduction must be correctly reported in the relevant section of the ITR form otherwise your donation no matter eligible won’t count for tax deductions.

5. Cash Donations Above Rs. 2,000

It is important to note that in-kind donations like toys, medical supplies, food etc. do not qualify for tax exemptions. Also, when you donate through cash, make sure that your cash donation is less than Rs. 2,000 as cash donations above Rs. 2000 do not qualify for tax deductions.

6. Choosing an NGO Only for Tax Savings

While tax benefits can be an added advantage, choosing an NGO only because of the deduction available may not always lead to meaningful impact. Before contributing, research the organisation’s transparency, impact, and areas of work.

How Genesis Foundation Helps You Make Your Donation Count?

When you donate to charity like Genesis Foundation, your donation goes towards treatment of children with congenital heart defects (CHDs). Our mission- Save Little Hearts- ensures that children from financially disadvantaged backgrounds receive life-saving cardiac care. So, when you donate to Genesis Foundation, you are not only making a contribution towards a tax-saving opportunity but also helping create a direct impact on children and families who need support.

100% of donations from individual donors are used towards the treatment of children with no allocation towards administrative costs.

Save Tax by Donating to NGO: Make Your Donation More Meaningful

You save tax by donating to an NGO, but the true value of a donation lies in the lives it helps transform. By avoiding common mistakes and choosing a reliable organisation, you can ensure that your contribution creates maximum impact.

Donate to Genesis Foundation today! Your donation creates hope, restores dreams and transforms lives. https://www.genesis-foundation.net/donate.

This year also marks 25 years of Genesis Foundation. To mark this special milestone, we have created a commemorative film that captures the heart of the organization’s work and journey over the years.

Watch our 25-year milestone film here:  https://www.youtube.com/watch?v=LquCyP6C3zY.

#OnePromiseManyHeartbeats

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