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Tax exemption for doing charity
Hello, Currently my company and employees volunteer in feeding the homeless and poor. We buy all food items (rice, dal, oil, spices , plates, covers, water etc) and employees cook and distribute the food. My question is can i claim all the food items we buy as expenses on my company tax return. we are a small Pvt. Ltd company that provides technical services and there is no correlation between these food items and our services except we are trying to help the poor. Also we have accumulated cash reserves in the company from previous years profit (tax already paid) that I have not taken out as dividend. Instead of taking this money out as dividend can company donate this money to a private registered charity. Is there any tax that needs to be paid on this money? On the current year income it appears i can donate 10% of it (pre tax) to the private charity and based on what it is i can claim 50 to 100% deduction. Could you point me out the sections so i can get some clear understanding. Our office is located near a railway station and there are lot of homeless, migrants who go hungry everyday. we want to do our part but struggling to understand how we can do our best and make sure we don't keep paying taxes on charity as well.
Asked 5 years ago in Corporate Tax
You can claim deduction u/s 80g if you donate to specific trust / society ( who are taken certificate for 80G) This deduction can be claimed by any taxpayer – individuals, company, firm or any other person.
Donation to some specific entity fall under 100% exemption and other fall under 50% exemptions
you can donate upto 10% of your gross total income
No it would be difficult to claim such amount as expense.
It would be better if you do the work through some charity or trust and you'll get 80G deduction.
Why would you pay tax on reserves and you'll get 50% deduction of the amount you pay to trust.
80G(5) is the section.
We can have a phone consultation to discuss further.
In the current scenario you won't be able claim such deduction as it's not for your business purposes.
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Thank you
Hi,
No you cannot claim deduction of these items in your income tax return. It will be disallowed u/s 37(1).
Yes, company can pay the money to private charity instead of distributing as dividend.
Also, that 50-100% deduction is allowed u/s 80G only if you donate to an institution registered u/s 80G.
- Since the intent is good but such expenses will not be allowed to you. It is better to do such activity through charitable organisations having registration u/s 80G.
- Yes you can donate to some charitable institution.
- Section 80G
Hi
1.No.
2. Deduction under section 80 G is allowed only donation made to registered institution.
Hello,
Such expenses won't be allowed as a deduction.
Yes, the company can donate the money to specific trusts/societies (certified for 80G), the deduction would be available to the company u/s. 80G.
50% - 100% deduction is available under 80G.
I hope this answer satisfies your requirements.
Regards,
CA Hunny Badlani
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