When a non-profit NGO organization received the donation in cash or cheque, the NGO organization should issue a receipt to the donor. That donation receipt should bear the CIT approval period and the number of 80 g certificate.
Nonprofit NGO should avoid receiving money donation through cash which is safe both for the donor and the organization.
The basic rule for a donor to donate under section 80g an organization is 10% of his annual income. If the donor donates more than the 10%, then the excess amount will not be considered for tax relief and it will be ignored. Same time the donor get 50% tax exemption for the amount which he donated on the Gross total income.
After the deduction under 80 g on the Gross total income, the payable tax value of the net taxable income will be deducted from actual payable tax value. So the differential value of Actual payable tax and net payable tax will be the tax relief for the donor. Now let's see.
Example: Mr Xyz is working in a company and drawing a monthly salary of 20,000 Rupees. He donates an organization in a month for Rs. 6000/- Now let's calculate his 80 g tax relief:
|Particulars||Amount in Rs.|
|Annual salary income of Mr. Xyz - Income tax on this Rs. 24,200||2,40,000|
|Gross Total Income of Mr.Xyz.||1,60,000|
|Less: Deduction under 80 g on taxable income
( 50% of the donation amount )
|NET Income - Income Tax on this Rs.23,210||1,57,000|
|So the payable tax on Annual salary||24,200|
|Less: the payable tax after deduction under 80 g||23,210|
|Actual tax relief to the donor (Mr. Xyz)||990|