Section 80G: National Children Funds would fetch 100% deduction

Contribution to National Children Funds would fetch 100% deduction under Section 80G

(1) Existing provisions of section 80G:

The existing provisions contained in section 80G(1) provides that the assessee is allowed a deduction from his total income in respect of donations made by him to certain funds and institutions. The deduction is allowed at the rate of 50% of the amount of donations made except in the case of donations made to certain funds and institutions specified in clause (i) of sub-section (1) of section 80G, where deduction is allowed at the rate of one hundred per cent. In the case of donations made to the National Children’s Fund, deduction is allowed at the rate of fifty per cent of the amount so donated.

(2) Amendment proposed by Finance Bill, 2013:

Finance Bill, 2013 proposes 100% deduction under section 80G, in case of donations made to the National Children’s Fund by amending clause (i) to existing sub-section (1) with effect from 1-4-2014, which provides as under:

‘In section 80G of the Income-tax Act, in sub-section (1), in clause (i), after the words, brackets, figures and letters “or in sub-clause (iiiab)”, the words, brackets, figures and letter “or in sub-clause (iiib)” shall be inserted with effect from the 1st day of April, 2014.’

The proposed amendment allows hundred percent deductions to donations made to the National Children’s Fund. This is to ensure parity between other funds of national importance.

(3) Impact of amendment:

(a)  Memorandum explaining proposed amendment: Under the existing provisions of section 80G an assessee is allowed a deduction from his total income in respect of donations made by him to certain funds and institutions. The deduction is allowed at the rate of fifty per cent of the amount of donations made except in the case of donations made to certain funds and institutions specified in clause (i) of sub-section (1) of section 80G, where deduction is allowed at the rate of one hundred per cent. In the case of donations made to the National Children’s Fund, deduction is allowed at the rate of fifty per cent of the amount so donated.

Donations to Funds which are of national importance have been generally provided a deduction of one hundred per cent of the amount donated. Since the National Children’s Fund is also a Fund of national importance, it is proposed to allow hundred per cent deduction in respect of any sum paid to the Fund in computing the total income of an assessee.

This amendment will take effect from 1st April, 2014 and will, accordingly, apply in relation to assessment year 2014-15 and subsequent assessment years.

(b) Impact of Amendment: The proposed amendment is totally in national interest and for attracting more donations to National Children’s Fund. National Children’s Fund comes under the Ministry of Women and Child Development. Assistance under the Fund is provided to promote the objectives and fund of different programmes for children who are affected by natural calamities, disasters, distress, and in difficult circumstances through voluntary agencies and State Governments in un-served and under-served regions including tribal and remote areas including children of prisoners, children affected by riots, aggression, children affected by trafficking and children of prostitutes. These programmes cannot be merged with any other programmes that are already being funded or in any ways being supported by Central/State government or any other authorities like the Central Social Welfare Board. It is hoped that donations which are made to such funds are utilized in the right direction, so that the assessee’s are encouraged to make large donations for such noble cause.

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