Tax Sops on Donations
Inspite of all the contributions made to social causes, there is a huge gap between the demand of money from the needy and the amount donated by philanthropists.
This probably, is the reason why the Government has given tax benefits on donations. The amount donated towards charity attracts deduction under 
section 80G of the Income Tax Act. Section 80G has been in the law book since financial year 1967-68 and it seems it’s here to stay. Several deductions have been swept away but the tax sop for donations appears to have survived the axe. The main features of tax benefit with respect to charity are as follows:
Who can get a Tax Break?
Any person or ‘assessee’ who makes an eligible donation is be entitled to get tax deductions subject to conditions. This section does not restrict the deduction to individuals, companies or any specific category of taxpayer.
Which Donations can get you a Tax Break?
There are thousands of trusts registered in India that claim to be engaged in charitable activities. Many of them are genuine but some are untrue. In order that only genuine trusts get the tax benefits, the Government has made it compulsory for all charitable trusts to register themselves with the Income Tax Department. And for this purpose the Government has made two types of registrations necessary. Only if the trust follows the registration, they will get the tax exemption certificate, which is popularly known as 80G certificate. States on Wednesday asked the centre to continue the relaxation in meeting the fiscal deficit target in the next financial year as well
The centre had in the last budget relaxed the debt consolidation and relief facility (DCRF) guidelines by hiking the fiscal deficit target to 4% of the respective gross state domestic product (GSDP) from 3.5% earlier, to enable states increase borrowings for undertaking capital expenditures in wake of the global economic crisis.
The states also expressed hope that the central government would continue with policy of enhanced expenditure on rural infrastructure schemes.
The finance minister, however, highlighted the need for fiscal consolidation at the earliest.
The demand was raised by the states at a pre-budget meeting with finance minister Pranab Mukherjee.
The finance Minister said the way-sand-means position of the state governments shows that some of them are holding large cash balances and they need to utilise these surpluses for development activities. The finance minister also said the impact of the overall fiscal stimulus of the government has started showing results and the country’s gross domestic product (GDP) is expected to expand by around 7.75% in the current financial year.
He also expressed hope that the implementation of the Direct Taxes Code and the proposed Goods and Services Tax would lead to a broadening of the tax base, a simplified tax structure and an improvement in tax compliance. State finance ministers, who will meet Mr Mukherjee on January 29, on GST want the implementation of the tax to be postponed by an year to April 1, 2011.
The finance minister also stressed on the need to increase agricultural productivity and invited suggestions, including the scope for public private partnership in improving the effectiveness of public investments in the agriculture sector for achieving an annual growth rate of 4%.
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