Electronic tax

Can an NRI claim a tax deduction on NGO donations in India?

I am a Non-Resident Indian (NRI) based in Australia. i want to send 1 lakh each to two non-governmental organizations (NGOs) in India. Can I get a tax deduction for this or can the deduction only be claimed if the money is sent from my Indian account?

—Name withheld on request

Under the Indian Income Tax Act, read with the Foreign Contribution (Regulatory Act), 2010, an individual is eligible for a deduction from taxable income in India for donations made to NGOs in India at provided that the following conditions are met:

-The NGO has received approval from the Indian government to receive foreign donations

-The NGO is registered under Section 80G of the Income Tax Act 1961 in India

-The donation is made electronically.

So, if you intend to transfer funds from outside India, you can check with the NGO if it has received approval from the Indian government to receive foreign donations and if it is registered in under Section 80G of the Indian Income Tax Act 1961.

The deduction for donation made to the registered NGO under section 80G of the Income Tax Act 1961 will be less than (a) 50% of the total donation made; or (b) 50% of 10% of Adjusted Gross Total Income. Adjusted gross total income will be calculated as total income minus all available deductions (except the deduction under Section 80G). The deduction is only available if the individual taxpayer has not opted for a preferential tax rate under the Indian Income Tax Act, which is available if the taxpayer is willing to waive exemptions and specified deductions (including deduction under section 80G).

(Question answered by Sonu Iyer, Tax Partner and Head of People Advisory Services, EY India.)

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