As the financial year 2024-25 draws to a close, taxpayers still have a golden opportunity to reduce their tax liabilities before March 31, 2025. If you're looking for a legitimate way to save on taxes while contributing to a meaningful cause, donating to the Ayodhya Ram Mandir could be a beneficial option. Under Section 80G of the Income Tax Act, a 50% deduction is available on donations made to the Shri Ram Janmabhoomi Teerth Kshetra Trust. However, specific rules and limitations apply. Let’s understand how you can take advantage of this provision.
How Does Tax Saving on Donations Work?
For those opting for the old tax regime, Section 80G allows deductions on donations to specific government-notified trusts. However, not all donations qualify for tax benefits. To claim deductions, it is essential to contribute to a trust recognized under this section.
The deduction on donations made to the Ram Mandir is capped at 50%, meaning you can only claim half of the amount donated as a tax deduction. Additionally, there is an upper limit based on your Gross Total Income (GTI), which must be considered before making the donation.
Understanding the 50% Deduction Rule
You may wonder why donations to the Ram Mandir do not qualify for a 100% deduction like some other charitable contributions. Here are the three primary reasons:
- Section 80G Regulations: The deduction percentage depends on the government’s categorization of the organization under this section.
- Income Limitations: The deduction is subject to the qualified limit of 10% of your Gross Total Income (GTI). If the donation amount exceeds this threshold, the excess portion will not qualify for deductions.
- Mode of Payment: The method of donation, whether online or offline, also plays a role in determining eligibility for the deduction.
What Types of Donations Do Not Qualify?
According to Amit Maheshwari, a tax partner at AKM Global, only contributions made directly to the Shri Ram Janmabhoomi Teerth Kshetra Trust qualify for the 50% tax deduction. However, donations made during religious ceremonies or for social welfare activities do not fall under this provision and are not eligible for any deductions under Section 80G.
Furthermore, deductions apply only to donations made within the prescribed GTI limit. The Gross Total Income is calculated after excluding deductions under Sections 80C to 80U (except 80G) and any income derived from short-term and long-term capital gains. This means that even though 50% of your donation amount qualifies for deductions, the total deduction cannot exceed 10% of your GTI.
Final Thoughts: Should You Donate for Tax Benefits?
Donating to a noble cause while enjoying tax benefits is an excellent way to contribute to society while managing your financial liabilities. If you are planning to take advantage of this deduction, ensure your donation is made before March 31, 2025, to claim the benefits for this financial year. Remember to keep all relevant receipts and documentation to support your tax claims.
With the deadline fast approaching, this is your last chance to make the most of this tax-saving opportunity while contributing to the historic construction of the Ram Mandir in Ayodhya. Don't miss out—act now and secure your tax benefits today!
