“DONATION EXCEEDING Rs. 10,000/- IN CASH IS NOT ELIGIBLE FOR DEDUCTION U/S 80G”

TAX TALK-03.12.2012-THE HITAVADA

TAX TALK  

BY CA. NARESH JAKHOTIA

Chartered Accountant

“DONATION EXCEEDING Rs. 10,000/- IN CASH IS NOT ELIGIBLE FOR DEDUCTION U/S 80G”

Query 1]

I am a senior citizen aged 62 years. My income from pension is Rs. 2,07,989/-  and Interest on FD’s is Rs. 9,425/-. Total Rs. 2,17,414/-. I have paid Rs. 2,096/- as mediclaim insurance of my wife in Oct- 2011. I suppose I don't have any tax liability. But is it necessary for me to file the return? Kindly guide. [D. D. Dhagamwar-deepak_dhagamwar@yahoo.com]

Opinion:

You are not mandatorily required to file the return of income for the FY 2011-12 as your Gross Total Income during the relevant year is below the applicable basic exemption limit.

For senior citizen below the age of 80 years, the basic exemption limit is Rs. 2.50 Lacs for the FY 2011-12.

Query 2]

I am an individual tax payer with transactions under business, F&O trading to be precise. I could not e-file my IT Returns in time due non-finalization of accounts chiefly on account of serious personal health problems. By the time I could finalize my returns for the assessment years 2010-11, 2011-12 and 2012-13, it was late for e-filing of the return for the AY 2010-11. My other two returns for 2011-12 and 2012-13 were duly accepted through e-filing process.

 Please advise me how I can submit my IT Return for the AY 2010-11, which is ready for submission with me. [Krishna Kumar- k_kumar39@hotmail.com]

Opinion:

1.      U/s 139(1), Income tax return has to be filed within the due date prescribed. If the return is not filed u/s 139(1), it can be filed belatedly u/s 139(4) within one year from the end of the relevant Assessment Year. Effectively, an assessee can voluntarily file the return of income u/s 139(4) within a period of two year from the end of the relevant financial year. The assessee in normal course does not have the option to file the return of income beyond two financial years.

2.      In your case, it appears that you were having taxable income during the FY 2010-11 and you wish to pay the legitimate tax on your income by filing your income tax return but you are unable to pay it as
a) The e-filing process is not supporting the filing for the FY 2009-10 &
b) The filing is not legally possible u/s 139.

3.      One practical solution could be to write a letter to the Assessing Officer pointing him about the facts of the case with specifically covering the reason for non filing & intention to pay the tax due on the income. In such case, an Assessing Officer can issue a notice u/s 148 in response to which you can file the return of income for the FY 2009-10.

Query 3]

Sir, after the budget for 2012, I have read that the donation to charitable organization is also eligible for income tax benefit? Whether there is any restriction of making the payment in cheque only? I wish to make donations to few institutions working for Orphans & Goshala.

Also please let me know whether there is any deduction towards the health check up also? Please enlighten & guide. Please also tell under which section I can make the claim in the return?  [Shridhar K]

Opinion:

1.       Section 80G provides for a deduction in respect of donations to certain funds, charitable institutions etc subject to the conditions that such funds/ institutions are approved u/s 80G(5)(vi) of the I.T. Act, 1961. It may further be noted that the full amount is not eligible for deduction from Income. The deduction admissible is @ 100% or 50% of the donation amount depending upon the fund/ institutions to whom the donation is done. The total deduction u/s 80G is restricted to a maximum of 10% of the adjusted gross total income. If the receipt of Donation reveals the fact of approval of the said trust U/s 80G(5)(vi), then you can claim deduction. Recently, by the Finance Act-2012, Section 80G has been amended so as to provide that payment exceeding Rs. 10,000/- will be allowed as deduction u/s 80G only if such is paid by any mode other than cash. You may note that the limit of Rs. 10,000/- is not applicable on aggregate basis but is applicable on individual basis. If one makes a donation of an amount equal to or less than Rs. 10,000/- to one or more than one trust then the deduction would not be denied. But, if the cash donation in an amount exceeding Rs. 10,000/- at a stroke is made to any particular trust then the deduction would not be admissible.

2.       From the A.Y. 2013-14 (i.e., FY 2012-13), an individual can claim deduction towards any sum paid on account of preventive health check up of himself, spouse, dependant children or parents. It may be noted that the total deduction towards preventive health check up cannot exceeds Rs. 5,000/-. The said deduction is admissible u/s 80D of the Income Tax Act-1961 & is over and above the deduction of Rs. 15,000/- / Rs. 20,000/- otherwise also available towards mediclaim policy.