The pandemic of COVID-19 has engulfed the entire world and has posed serious challenges for the health and economic security of millions of people worldwide. In India too, the spread of coronavirus has been alarming and is posing severe health and economic worries for our country.

Keeping in mind the need for having a dedicated national fund with the primary objective of dealing with COVID-19 pandemic and to provide relief to the persons affected, the Prime Minister on 28th March, 2020 set up a public charitable trust under the name of ‘Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund’ (PM CARES Fund)’. The amount transferred to such account shall be eligible for deduction under Section 80G of the Income Tax Act.

Reference to Section 80G of the Act is as follows:

Any sum paid by the assessee in the previous year as donations to certain relief funds and charitable institutions set up by the government, the same shall be eligible for deduction of up to either 100% or 50%, with or without restriction under this section.

Provided, the aggregate of sum donated in the specified funds and charitable institutions shall not exceed 10% of the Gross Total Income.

Earlier, the government didn’t specify the percentage of amount that shall be eligible for deduction under the Act. The government vide an ordinance on 31st March, 2020 made certain extensions and clarifications.

The ordinance amended the Act to provide the PM CARES Fund to be treated same as PM National Relief Fund and hence the donation to PM CARES fund shall be eligible for 100% deduction under Section 80G of the IT Act. Further, the limit of deduction of 10% of gross total income shall also be not applicable for donation made to PM CARES Fund.

 The ordinance also extends the deadline for claiming of deduction under this section. Now, any person including corporate making donation to PM CARES Fund up to 30.06.2020 can claim 100% deduction u/s 80G against the income of FY 2019-2020. Also, the donation made shall not lose any person including corporate’s eligibility to pay tax in concessional taxation regime for income of FY 2020-2021.

Any amount paid to PM CARES Fund before 31.03.2020(before the ordinance) shall also be eligible for 100% deduction u/s 80G of the IT Act.

Further, the government has also extended the date for making various investment or payment for claiming deduction under Chapter-VIA-B of IT Act which includes Section 80C such as LIC, PPF, NSC, 80D (Mediclaim), 80G (Donations), among others to 30.06.2020. Hence the investment or payment can be made up to 30.06.2020 for claiming the deduction under these sections for FY 2019-2020.

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