Your Taxes

What are the rules and procedures for claiming deduction under Section 80G for donations to charitable organisations? I plan to donate ₹3 lakh to a charitable organisation during current financial year.

P Rajkumar

As per the provisions of the Income-tax Act, 1961, eligible contributions/donations towards specified funds/charitable institutions (includes approved relief funds, religious institutions etc.) which have approval under the Act can be claimed as deduction under Section 80G of the Act. Eligible donations, as specified under Section 80G, qualify for deduction up to 100 per cent or 50 per cent of the donation amount. Further, the maximum amount of donation eligible for deduction may be with or without the upper cap limit of 10 per cent of adjusted gross total income (AGTI).

AGTI is total income after considering the available exemptions under the Act and deductions under chapter VIA of the Act (excluding deduction under Section 80G).

Further, from FY 2017-18, no deduction is allowed for any donation made in cash exceeding ₹2,000. Thus, donations above ₹2,000 should be in any mode other than cash to be eligible for deduction under Sction 80G.

You would need to provide the details of the donation — the nameof the charitable organisation, PAN of the donee, address of the donee and the amount of contribution in your tax return to claim the deduction.

Assuming that your donation of ₹3 lakh is to an eligible fund/institution and qualifies, say, for 50 per cent exemption with limit, you shall be eligible to claim a deduction of up to ₹1.50 lakh (50 per cent of ₹3 lakh) subject to the upper cap limit of 10 per cent of adjusted gross total income.

I have deposited ₹4.5 lakh in post office MIP for five years and the interest on that is being credited to my post office saving account.

This amount is being deposited to a RD account by auto debit. Will the interest in both cases be taxed? If yes, shall I get any tax relief ?

Mathew Tharian

As per the provisions of the Income-tax Act, 1961 (‘the Act’), any interest income arising on your investments including the deposits with post office or bank is taxable under the head “income from other sources”. No specific exemption is available in regard to such interest incomes. However, you may claim the deduction under Section 80TTA up to ₹10,000 for interest income earned from your deposits with post office or bank. It is to be noted that the deduction is available only for the interest income from savings account and is not available to the interest income arising on term deposits (including recurring deposit).

The writer is a practising chartered accountant. Send your queries to taxtalk@thehindu.co.in

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