Interim Budget 2024 Expectations: Extending tax benefits for donations to Ayodhya Ram Mandir
By Sunita Iyer | First Published Jan 29, 2024, 1:17 PM ISTAnticipation grows for potential tax reforms in the Interim Budget 2024, focusing on extending deductions to donors contributing to the Ayodhya Ram Mandir.
In anticipation of the Interim Budget 2024, individuals contributing towards the recently inaugurated Ayodhya Ram Mandir have their eyes set on potential tax reforms that could enhance the incentive for donations. As the country gears up for its fiscal policies, taxpayers are hopeful for an extension of tax benefits to donors under the new personal tax regime, aligning with social and cultural contributions.
Under the current tax framework, donations made to the 'Shree Ram Janm Bhoomi Teerth Kshetra' Trust qualify for deductions solely in the old personal tax regime, leaving donors in the new regime without tax benefits. To foster greater participation and support for the cause, individuals are eagerly awaiting the inclusion of such deductions in the new tax regime.
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Maneesh Bawa, a Partner at Nangia Andersen India, highlighted the significance of tax deductions under section 80G for donations made to the Shri Ram Janmabhoomi Teerth Kshetra Trust. "Individuals can get the benefit of tax deduction under section 80G for donations made to Shri Ram Janmabhoomi Teerth Kshetra Trust. The Central Government has notified "Shri Ram Janmabhoomi Teerth Kshetra" in this regard long back," he said recently.
The Central Board of Direct Taxes (CBDT) has also recognized the Ayodhya Ram Mandir as a place of public worship, laying the foundation for tax benefits for donors. As per a CBDT circular dated May 8, 2020 "The Central Government hereby notifies 'SHRI RAM JANMABHOOMI TEERTH KSHETRA' (PAN: AAZTS6197B) to be place of historic importance and a place of public worship of renown for the purposes of the said section from the year F.Y. 2020-2021, relevant to the Assessment Year 2021-2022."
In light of this, the upcoming Interim Budget holds the potential to address the disparity between the old and new tax regimes concerning deductions for donations to religious trusts. The expectation is for the government to extend the benefits of section 80G to donors in the new tax regime, reflecting a special gesture towards social and cultural philanthropy.
Dr. Suresh Surana, founder of RSM India, sheds light on the mechanics of tax deductions, emphasizing the need for clarity on the qualifying limits and adjusted gross total income. As of now, donors under the old tax regime can claim 50% of their contributions to the Ayodhya Ram Mandir Trust, subject to a qualifying limit.
"There is a qualifying limit of 10% of the Adjusted Gross Total Income. Adjusted gross total income would be computed by reducing from the gross total income, all deductions available under sections 80C to 80U (excluding section 80G) as well as income subject to special tax rates such as capital gains etc," Dr Suresh recently said.
For donors navigating the tax landscape, understanding the nuances of deduction eligibility is crucial. Cash donations up to Rs 2,000 are eligible for section 80G deductions, while donations in kind do not qualify for tax benefits.
Chartered accountant Tarun Kumar Madaan recently said, "Donation in cash can be made of any amount like Rs 1 lakh or Rs 11 too and the Ayodhya Ram Mandir Trust will issue a donation receipt also. However, the said individual cannot claim more than Rs 2,000 as 80G deduction while filing ITR since he donated in cash. This particular restriction of claiming up to Rs 2000 as 80G deduction is not there on donations made using other methods like UPI/Cheque/Demand Draft/NEFT/IMPS."
As donors await the unveiling of the Interim Budget, they anticipate a streamlined process that facilitates their contributions while optimizing tax benefits within the prescribed limits. The government's acknowledgment of philanthropic endeavors through tax incentives is poised to inspire greater civic engagement and support for noble causes like the further development of the Ayodhya Ram Mandir.
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