Section 80G Deductions Make Donation To PM CARES Fund An Added Advantage

Putting all the worries to rest, the Centre on March 31 clarified that the donation to the PM CARES Fund shall be eligible for 100 per cent deduction without limit under 80G of the Income Tax Act and will get same tax treatment as available to the Prime Minister’s Relief Fund. To meet the challenges posed by COVID-19 pandemic, PM CARES Fund has been set up by the government. However, there was a confusion around the deductions under Income Tax Act.

As Ved Jain, a tax expert and a former president of the Institute of Chartered Accountants of India says: “Charity can only be done from your income. So, in order to encourage charity, the Government of India thought to give some tax reliefs to these kinds of contributions. That is why there is 80G, which says the trust and institutions that would be notified under this will get 50 per cent exemption. But over a period of time, many issues of national importance came into emergence that led the government give 100 per cent exemption, as given under PM Relief Fund and CM Relief Fund. When PM CARE Fund (Dedicated to fight COVID-19) was created, the government instead of putting this under special category, had put it under the general category and that is where the confusion came in. The issue was flagged to CBDT that if the contribution to the PM CARES fund is eligible only for 50 per cent deduction then why not contribute to PM Relief Fund where the contribution is eligible for 100 per cent deduction.  After this, a notification by the government on March 31, finally put this under special category and put all the confusion to rest.” 

For example if someone, with an annual income is Rs 10 lakh, donates Rs 2 lakh to the PM CARES Fund, the person gets a deduction under 80G on the entire donation and the taxable income reduces to Rs 8 lakh.

Finance Minister Nirmala Sitharaman, on March 24, announced that tax related deadlines have been extended from March 31 to June 30 and also the deadline for filing belated ITR returns for FY19 is now deferred to June 30.

The Centre too has said that the date for claiming deduction under section 80G has been extended up to June 30, 2020. So, this means that the donations made till June 30, 2020 shall be eligible for deductions from income of FY19-20.