How to donate the money in order to get the tax reduction? | Can we get tax deduction by donating the money?

September 25th, 2010| How To.

How to donate the money in order to get the tax reduction? | Can we get tax deduction by donating the money?

donate Tax

We can know how to donate an amount and getting reduction in the tax from the following example. Kishan is a pensioner who is 80 years old and he gets a pension of Rs.3, 00,000 per year. His wife is Rukmini who is 75 years old and they get rents money up to Rs.3, 00,000. His second son is a business man who is 50 years old and earns 8 lakhs per year. His daughter in law is Roshini who is a doctor and earns Rs.30, 000 per month. No one has the reduction under section 80C among these people. For the year 2009-2010, they should pay Rs.1, 73,000. They want to donate Rs.1, 00,000 and they want to get full reduction in the tax or maximum reduction. They can get 50% tax reduction under the 80G section and the income reduces by Rs.50, 000. We can get the reduction for half of the donation amount as they confine the donation to 10% of the total income and they give the deduction to half of the amount only. For example, if Kishan donates one lakh rupees, he won’t get the deduction for half amount which is Rs.50, 000. He gets the reduction for 10% of his annual income which is half of Rs.30, 000 is Rs.15, 000. That means we can’t claim the remaining Rs.35, 000. Rukmini won’t get any reduction as there is no taxable income. His son may get reduction up to Rs.40, 000 and his daughter in law can get up to Rs.18,000 reductions. So we should donate the money by single as we get very less reduction. We should donate the money by separate checks so that we can get the tax reduction.

We should not give the donation on the name of Rukmini as her income is not a taxable one. It is sufficient to pay Rs.30, 000 by Kishan as he won’t reduction for Rs.15000. By doing this, his tax will reduce to Rs.4500 from Rs.6000. his daughter in law can donate up to Rs.36000 as the income reduces by Rs.18000 and the tax reduces to 19,400 to Rs.23000. his son can donate up to Rs.88000. he should now donate Rs.34000 as they both have donated Rs.66000. now the tax reduces to Rs.1,38,900. They get a tax reduction up to Rs.10, 200 by doing like this. The other way of getting more reduction is that the son pays Rs.80, 000 as donation and the daughter in law remaining 20% of the donation. They can get the tax reduction up to Rs.14, 000. So while donating the money, it is very productive to donate for those who get more money. It is very decide to the donation amount if we think properly.

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