Monday 24 January 2022
Deductions qualifying for tax exemption
Salaried
employees are major contributors to the bucket of taxpayers in a country. Income
tax is paid as a part or percentage of the annual income that an individual
earns. It is every citizen’s duty to pay his income tax for all the rights he
earns in the country while he earns as a salaried employee or as an
entrepreneur.
According to the Government of India’s e-Filing portal of the Income Tax Department, there were 8.83-crore taxpayers
till 7th September 2021.
The
money collected by the tax department is used to provide various facilities for
the benefit of the citizens. How do you think the Government of India is able
to provide facilities free of cost? For example, public utility services like
metro construction, road construction, free health care facilities for the
underprivileged, all come from the money that is paid when you pay taxes.
The Government
has made various provisions to help its citizens gain tax exemption in India.
Paying
tax is inevitable, however making smart investments that will help you save as
well, is a smart choice people can opt for.
Tax exemption in India
Depending
on the nature of the income, there are various categories for tax exemption in India. The most common
of these are: House Rental Allowance (HRA), Education loan, car loan, Leave
Travel Allowance (LTA), contribution towards Employee’s Provident Fund (EPF) Scheme,
etc.
House Rent Allowance
If
you are a salaried employee who lives in a rented house, you stand a chance to
get the benefit of HRA. This amount could either be totally or partially
exempted from income tax. However, if you are not living in a rented property
but claim HRA, this entire amount will be taxable.
Leave Travel Allowance
If
you are a salaried employee and your employer has the provision of LTA, you can
claim for the exemption of your travel within India under Section 10(5) of the
Income Tax Act, 1961. However, tax exemption does not include food expenses,
shopping and stay, but, only for travel of the individual, their family
including children.
Deductions under section 80C,
80CC and 80CCD (1)
This
is by far, the most extensively used option to save tax. To encourage
individuals to save and invest in retirements plans, the Indian Government has
made provisions for individuals under these sections. These include Life
Insurance premium, Equity Linked Savings Scheme (ELSS), Employee Provident Fund
(EPF), Contribution to PPF Account, National Pension Scheme, National Saving
Certificate (NSC), etc.
NGO donations under section
80G
An
individual can get involved in philanthropic donations for tax write off. Charitable organisations give a
platform for an individual to engage in humanitarian services as well as to appreciate
the noble work by making you eligible for tax exemption too. The deductions
under Section 80G of the Income Tax Act of 1961 towards charitable
organisations are either eligible for 50% or 100% tax exemption depending on
the NGO being supported.
When
you contribute by making donations for
tax write off, you are not only saving on your taxable income, but you also
add goodness in your life for helping people in need. Thousands of
not-for-profit organisations receive donations
for tax write off, but the help that they provide to the organisation to
work towards its cause is often gone unnoticed.
Benefits of making NGO
donations
·
Gives inner satisfaction of
helping people
·
Giving back to society makes
an impact
·
Connects with like-minded
people
·
Saves tax on your contribution
·
Draws attention to the cause
·
Helps people in need with what
they require
Every
little support to people in need gives them relief from their suffering. The
Akshaya Patra Foundation is an NGO in India that provides free and unlimited food
for education of children coming from challenging socio-economic backgrounds. It
has the distinction of being the world's largest NGO run school lunch programme
spread across 60 locations in 14 states and 2 union territories of India.
Akshaya Patra provides nutritious and locally palatable meals to 1.8
million children coming from low-income sections of society.
AkshayaPatra is an NGO known for 21 years of relentless service, financial
transparency, and credibility. All your donations above INR 500 made towards
this NGO, are eligible for 50% tax exemption under section 80G of the Income
Tax Act. You will also get a tax exemption certificate within seven working
days with your name and contribution amount. So the next time you plan on
making tax saving investment, think of the benefits of donating to NGOs.
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