## Understanding Section 80G and Its Importance
Section 80G of the Income Tax Act is an important provision for taxpayers under the old tax regime who contribute to charitable institutions. This section allows donors to claim deductions on donations made, reducing their taxable income and thus their tax liability. However, recent changes and clarifications issued by the Central Board of Direct Taxes (CBDT) have brought new rules and FAQs regarding these deductions, aimed at ensuring transparency and authenticity in donation claims.
## New FAQs from the CBDT: What Taxpayers Should Know
The CBDT has released a set of detailed Frequently Asked Questions (FAQs) to address common concerns and procedural clarifications related to claiming deductions under Section 80G in Income Tax Returns (ITR). These FAQs emphasize stricter verification processes, particularly the matching of donor and donee data during ITR verification to prevent fraudulent claims.
### Verification and Data Matching
One of the critical updates is the introduction of a robust data matching process where donation details provided by the donor must correspond with those recorded by the donee institution. This ensures that the claimed deductions are legitimate and backed by documented donations.
### Cash Donations Limit
Taxpayers should be aware that any cash donations exceeding Rs 2,000 are not eligible for deductions under Section 80G. This rule encourages digital transactions for transparency and traceability.
### Applicability to Tax Regimes
It is important to note that Section 80G deductions apply only to taxpayers filing under the old tax regime. Those who opt for the new tax regime cannot claim deductions for charitable donations under this provision.
## Practical Steps for Claiming Section 80G Deductions
To correctly claim deductions under Section 80G:
– Ensure the donee organization is registered and eligible to issue donation receipts under Section 80G.
– Maintain clear records and receipts for all donations made.
– Verify that the donations were made through acceptable modes, preferably non-cash.
– Accurately report the donation details in your ITR for smooth processing and validation.
## Conclusion
Section 80G remains a valuable tool for taxpayers wishing to support charitable causes while optimizing their tax liabilities under the old tax regime. However, with the new FAQs issued by the CBDT, taxpayers must be diligent in maintaining proper documentation and following procedural requirements to avoid rejection of deductions. For more detailed information, taxpayers can refer to the official [Times of India article on Section 80G FAQs](https://timesofindia.indiatimes.com/business/financial-literacy/taxation/section-80g-explained-cbdt-issues-faqs-on-itr-donation-deductions-what-taxpayers-should-know/articleshow/126095831.cms).
—
*Image Credit: Times of India*
Leave a Reply