How to claim Section 80G deduction if same not reflected in Pre-filled ITR

WHAT TO DO WHEN YOU NOT FIND THE ORGANISATION YOU HAVE DONATED FOR CLAIMING DEDUCTION U/S. 80G OF INCOME TAX ACT,1961.

The Central Government has mandated registration of Charitable Institutions  starting this financial year, with the Income Tax Department, which will in turn assign a unique registration number. The government wants to account for fake charities and improve compliance.  

If you expect income-tax deduction benefits on your donations, then from some key changes that have been made from this year. Donations only to select charitable trusts would be eligible for tax deductions. 

KEEP BELOW MENTIONED POINTS ,WHILE DONATING AND CLAIMING DEDUCTIONS 

IS THE TRUST REGISTERED WITH THE GOVERNMENT? 

i) Starting this financial year, charitable trusts must register with the Income Tax Department, which will in turn offer a unique registration number.

ii) Your donation details, as captured by your Permanent Account Number (PAN), will feed into your pre-filled income tax return forms from assessment year 2022-23.

iii) Since this is the introductory year for this mandatory registration, none of the charitable trusts are currently registered.

So, if you randomly donate to any organisation this financial year, you would not be able to claim the taxation benefit for the amount donated. 

WHY IS REGISTRATION MANDATORY FOR CHARITABLE TRUSTS? 

Over the years, the government has been observing leakages caused due to fake donation claims and that the government “found that fake companies were formed to help individuals claim tax deduction for donations, and were being used to convert black money transactions. 

In some cases the interest income too was not being declared by trusts and there were no means to validate whether the donation has actually been made. 

 The Tax Deduction and Collection Account Number (TAN) and PAN details, along with address of the trusts, were required to claim the benefit of Section 80(G) as electronic filing was introduced. And now, the charitable trust to which you donate must also be registered with the government. 

ENTITIES ELIGIBLE FOR TAX DEDUCTIONS 

It is safe to contribute to the Prime Minister’s / Chief Ministers’ relief fund. The individual taxpayer who is making the donation will be eligible for deduction of the contribution made. 

Other charitable trusts run by various government bodies, too, are still eligible for offering you Section 80G tax deduction benefits. 

Many institutions are facing challenges of non-renewal due to glitches in income tax website, which is expected to get resolved in the coming weeks. 

FULL 100 PERCENT CAN BE CLAIMED 

You can only claim a part of the tax benefit, unless the registered fund is eligible for 100 percent tax deduction benefit. The government has listed select funds  eligible for 100 percent tax deduction equivalent to the charity amount, while others are eligible for deduction of only 50 percent of the donation amount. 

Another condition to claim the 80G benefits is that one can claim either 100 percent or 50 percent of the amount donated, subject to it being up to 10 percent of the gross total income. 

Let’s say a person earning Rs 5 lakh donates Rs 1.20 lakh. If the donation that can be claimed for tax deduction stands at 50 percent of the amount, she could claim Rs 60,000 under 80G benefits. But, as she can claim only 10 percent of her gross income as deduction, the 80 G benefits permitted would be Rs 50,000 alone.

IF PRE-FILLED FORM FAILS? 

The details of donation would be captured from charitable trusts and would be pre-filled in your tax returns. As this is a major revamp in the taxation portal, there are chances that your donation made in the past would not reflect in your income tax return forms. 

WHAT SHOULD YOU DO IF THE DONATION IS NOT REFLECTED IN YOUR RETURNS?  

We can add details of donations made in the income tax return manually if not reflected in pre-filled return forms and claim benefits. For this purpose you have with you below mentioned details ;

1. Name of Organisation;

2. PAN Number of Organisation;

3. TAN number of the Organisation;

4. Registration Number with central government;

5. Amount paid;

6. Date of payment;

7. Address of the organisation

8. The eligibility of fund ( whether eligible for 100 % or 50% deduction )

CONCLUSION: a lot of changes brought by the government for FY 2020-21 and there is new income tax portal also. In many cases you find that your details will be in per-filled conditions and you cannot able to change the same. You have to rectify/modify the same and you have to keep proof of the same. In case of donations if, trust/NGO/Organisation is not registered with the government, then their details will not shown in the form and same will be fillies manually and you have to keep all documents with you are certificate received under Section 80G of the Income Tax Act, 1961. We are still facing glitches on the income tax website and hope that same will be solved till 15/09/2021.

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DISCLAIMER ; the article produced is only for knowledge and information of readers. It is advisable to consult with professionals before taking any actions on any point of article. The above is personal view of the author and will not be considered as professional advice.