Income-tax returns: Don't forget to claim deductions on donations made

MUMBAI: July 31, the last date for filing your income tax returns, is fast approaching. It's time to get all your tax-related documents in order. If you are salaried individual, the Form 16 handed over to you by your employer will largely take care of everything. It contains all the relevant information including your taxable income, tax-saving investments made and tax deducted.

However, you'll find that Form 16 omits a crucial piece of information. It does not contain any details related to donations made by you to approved charities, if any. Although such donations are eligible for exemption under section 80G, they have to be claimed separately at the time of filing the returns.

Now, proofs supporting deductions like investment in ELSS (equity-linked savings scheme), premium paid towards health insurance are to be submitted to your administration or payroll department, which incorporates the information into Form 16. But, a different procedure has to be followed for claiming deductions under section 80G. These reliefs can be claimed only at the time of filing returns.

Before doing so, however, you need to ascertain whether the donations made meet all the prescribed requirements. First of all, you need to ensure that you have selected the appropriate charity - that is, the organisation should approved under Section 80G of the Income Tax Act. Typically, charities display their 80G-status prominently on their websites. You need to make sure that the validity period of the registration certificate issued to the charity or approved trust has not expired.

This apart, you need to maintain all the records in proper order - the receipt issued by the charitable organisation acknowledging the donation is key. The rate of deduction will be either 100% or 50% (which could be further restricted to 10% of total income as per tax provisions for the purpose) of the qualifying amount, depending on the organisation chosen. Such organisations or trusts include the Prime Minister's National Relief Fund, the Army Central Welfare Fund and NGOs like Child Relief & You, HelpAge India and In Defense Animals.

""While filing returns this year, you will have to mention certain additional details like the name of the organisation, its PAN details, and the amount donated,"" informs Vaibhav Sankla, director, H&R Block. Remember, you are not required to submit the donation receipts, irrespective of whether you are filing your returns electronically or physically along with the Return-related forms. ""However, the original receipts should be preserved carefully. In case of a scrutiny, you can always produce these documents as evidence of having made the donation,"" adds certified financial planner Pankaj Mathpal, CEO, Optima Money Managers.