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CA Umesh Sharma

CA Umesh SharmaArjuna (Fictional Character): Krishna, The whole world has trembled due to the earthquake in Nepal. Due to this earthquake Nepal has suffered terrible financial losses. To come out of this disaster at every level everyone is contributing something or the other. If Indian Citizens help Nepal from India in any manner then will they get any benefits in Income Tax?

Krishna (Fictional Character): Arjuna, after the earthquake in year 1934 this was the most devastating earthquake. Many people lost their lives, many buildings have collapsed, Human life has been disconnected and the whole Economy has been disturbed. It is said that Nepal has suffered a loss of 20 Billion Dollars. Nepal needs 2600 crore to recover from this crisis now. Governments of various countries have appealed to help Nepal with the intention of Humanity and to cope up with the inevitable disasters. Indian Government has provided Vehicles, Helicopters, Food, Medicines, etc. to Nepal through “Operation Maitri”. Our respected Prime Minister has promised that he will take the best possible efforts to help the victims of Nepal to the maximum extent. Many social and charitable organizations are collecting donations and providing Food, Medicines, etc. to Nepal. Many Citizens, Companies have given their donations to such Organizations. Many members of Parliament have donated their one month salary to Nepal. Income tax department also participated in this and announced a circular on 28th of April, 2015. Thus Indian can help in Nepal and get tax benefit in India.

Arjuna: Krishna, How will the Indian Charitable Institutions get the benefit of Income Tax by helping the Victims of Nepal Earthquake?

Krishna: Arjuna, Charitable Institutions have to get registered u/s 12 of Income Tax Act and have to mention the objects of Charitable Institution. If expenditure is incurred on the said objects in India then Income Tax is not required to be paid. For application of funds outside India and getting income tax exemption, Charitable Institutions have to get registered u/s 11(1) (C). Income Tax Department in the circular dated 28th April, 2015 has announced fast track approval to Charitable Institutions who desire to provide help to Nepal and who are seeking approval. The Department has decided to give approval within two working days of receiving the completed applications. Institutions willing to provide help to Nepal should get registered u/s 11(1) (C). Application along with the necessary documents will have to be submitted to the Delhi office of Income Tax department. The list of documents required is mentioned in the notification. No tax is Payable to Institutions if they get permission and have given donation to Nepal.

KarneetiArjuna: Krishna, how does the Indian Citizen get benefit in Income Tax by helping Victims of Nepal Earthquake?

Krishna: Arjuna, for contributing to Nepal, donations to Charitable Institution registered as mentioned above and u/s 80G of Income Tax Act will have to be given. If donation is made then deduction u/s 80G of 100% or 50% as the case may be can be availed. For e.g. if a person has donated Rs. 10,000 to a registered Charitable Institutions then the person will get 50% deduction of Rs. 5,000 u/s 80G of Income Tax Act and if the person comes under the slab of 30% then he will be benefited with Rs.1500 of Income Tax. Deduction of 50% or 100% will depend on the Institutions to whom donation is given. Like, deduction of 100% will be available if donation is given to Prime Minister Relief Fund. Everyone should verify with the Institution to which Donation is being given, whether it is registered or not and if they will get deductions in Income Tax Act. By this, we can help Nepal and Tax can also be saved. Receipt for the given donation should be kept on record and it should consist of PAN of the Institutions.

Arjuna: Krishna, what should one learn from the calamity in Nepal and by helping them?

Krishna: Arjuna, not everyone is able to help. Implying that, many people cannot help even if they wish to help. We should be satisfied by aiding those who are in need during tough times. It is not possible for everyone to go to Nepal for giving help. So help can be given by staying in India itself. Donors can give donations through the sources available to them. Many people give donations in the form of Food, Clothing etc. Financially strong Taxpayers can provide Financial Assistance through monetary donations. India has to follow Neighborliness and thus all Indians should help their neighboring country by “Extending a Helping Hand to Nepal and simultaneously getting Tax Benefits in India”

Author Bio

1. Central Council Member of ICAI. 2. Vice-Chairman of WIRC of ICAI for the period 2015-2021. 3. Youngest Chairman of Aurangabad Branch of WIRC of ICAI in 2002. 4. Author of Popular Tax articles series based on Krishna and Arjuna conversation i.e “KARNEETI” published in Lokmat on every View Full Profile

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  1. CA Umesh Sharma says:

    Dear Guptaji,
    It is available on website of Income Tax.
    The link of same is as under:

  2. Gupta says:

    Is the circular issued by CBDT available in public domain. As i check now, no circular referred in your article available in IT website.

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May 2024