What is 80g deduction limit
80g deduction limit is an amount that can be deducted from the taxable income of a taxpayer. The limit was introduced to encourage citizens to donate money for welfare and religious purposes, as it offers tax relief to individuals who do so. This deduction is available under section 80g of the income tax act, 1961.the 80g deduction limit allows taxpayers to claim deductions up to 100% or 50% on donations made towards specified funds or charitable institutions approved by the government. These donations are eligible for tax benefits only when made in cash or kind, and not when done through cheques or demand drafts. The maximum amount of donation that can be claimed under this section is rs 10,000 per annum; however, if the donation exceeds this amount then it will not qualify for tax exemptions.
Benefits of 80g deduction limit
Taxpayers who plan their income tax returns carefully can take advantage of the 80g deduction limit. This limit allows taxpayers to deduct from their taxable income a certain amount of money that has been contributed to an eligible charity or organization. The amount deducted is credited against the total income and reduces the overall taxes owed on that income.
The 80g deduction limit encourages individuals to donate funds towards social welfare activities, such as providing healthcare and education services in underprivileged communities, as well as other charitable causes such as disaster relief efforts. Additionally, it provides taxpayers with a way to reduce their taxable incomes by donating money that would otherwise be subject to taxation if left untouched. Furthermore, many charitable organizations provide donors with tax-free receipts for donations made within the limits of 80g deduction which helps them save even more money on taxes.
