Claim Up to 50% Tax Deduction on Donation Made to Ayodhya Ram Mandir

If you want to save tax for the financial year 2024-25, there’s still time to do so. There are many ways to save tax, among which one way to reduce your tax burden is by using Section 80G of the Income Tax Act. This section allows taxpayers to claim deductions on donations made to government-specified eligible charitable institutes.

One such eligible trust is the Shri Ram Janmabhoomi Teerth Kshetra Trust. To qualify under section 80G, you must make online donations and cash contributions up to Rs.2,000. This deduction is only available under the old tax regime. You can claim up to 50% of the amount under the old tax regime. The phrase ‘up to’ means that there is a limit to how much of the donation amount you can claim as a tax deduction. Not everyone will be able to claim the full 50% of their donation as a deduction.

Why is only a 50% Tax Deduction allowed for Donations made to Ayodhya Ram Mandir?

The maximum 50% tax deduction allowed for donations to the Ayodhya Ram Mandir is based on three key factors:

Section 80G: Maximum 50% for Donations

Section 80G of the Income Tax Act determines how much of a donation can be deducted from your taxable income. As per an expert, the donations made for Ayodhya Ram Mandir through the Shri Ram Janmabhoomi Teerth Kshetra Trust are eligible for a 50% deduction under Section 80G. This is because the trust has been officially notified by the government under subclause (b) of Section 80G (2) for such donations, specifically to renovate or repair the temple. However, contributions made to other activities, such as religious events or social welfare initiatives, are not eligible for this deduction.

Your Gross Total Income

The amount of tax deduction you can claim also depends on your total income. There is a limit on how much of your donation can be deducted based on your income. As per an expert, while you can claim a 50% deduction for donations to the Ayodhya Ram Mandir, there is a limit on how much you can deduct, which is 10% of your adjusted gross total income (GTI). If the donation you are making exceeds this limit, then it will not qualify for deduction.

The adjusted GTI is calculated by subtracting deductions under Sections 80C to 80U (except Section 80G) and any capital gains from your GTI. So, even though 50% of the donation is eligible for a deduction, the actual amount you can deduct will be limited to 10% of your adjusted GTI.

Mode of Contribution: Online or Offline

Whether you donate online or offline can also affect the deduction. Donations made in cash over Rs 2,000 are not eligible for a tax deduction under Section 80G. Additionally, donations in kind cannot be claimed for a tax deduction either. However, if you donate cash or by cheque, you can claim a deduction. The trust also allows individuals to donate via online mode and there is no upper limit on the amount of donation you can make online.

The above reasons collectively are used to determine how much deduction can be claimed for such a donation.

No Need for Form 10BE to Donate to Ayodhya Ram Mandir

To claim the tax deduction under section 80G, the trust must report the donation to the tax department via Form 10BD and is required to issue Form 10BE to the taxpayer who has donated. However, if you are donating to Ayodhya Ram Mandir, you do not need to submit Form 10BE.

An expert explains that the requirement to submit donation details in Form 10BD and issue a certificate in Form 10BE (which includes an ARN number) applies only to institutions or funds approved under 80G(2)(a)(iv) of the Income Tax Act. However, the Sri Ram Janmabhoomi Teerth Kshetra Trust is recognized under a different section, 80G(2)(b), which means they don’t have to issue the donation certificate in Form 10BE.

Will your ITR be inspected for claiming a Section 80G Tax Deduction with an ARN number?

The ARN helps the tax department to cross-check the claim of an 80G donation. The trust provides an ARN when the taxpayer donates. This is used to claim tax deductions. However, the Ayodhya Ram Mandir does not have to issue the donation certificate in Form 10BE and that is why no ARN will be given to the taxpayer.

As per an expert, If someone is claiming a deduction under Section 80G for the donations made to the Sri Ram Janmabhoomi Teerth Kshetra, they still would be processed successfully even without the ARN.