X, an individual who has opted out of the new tax regime under section 202(4) of the Income-tax Act,…
Under section 133(1)(b)(ii) of the Income-tax Act, 2025 (formerly s.80G of the Income-tax Act, 1961), 50% of the donation to such an approved charitable institution is…
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X, an individual who has opted out of the new tax regime under section 202(4) of the Income-tax Act, 2025, donated ₹ 20,000 by cheque during the tax year to a charitable institution approved under section 354, donations to which qualify for a deduction of 50% subject to the qualifying limit under section 133. His adjusted gross total income for the tax year is ₹ 1,50,000. How much deduction can he claim under section 133 ?
Answer and explanation
Correct answer A
Under section 133(1)(b)(ii) of the Income-tax Act, 2025 (formerly s.80G of the Income-tax Act, 1961), 50% of the donation to such an approved charitable institution is deductible, and under section 133(2) the aggregate of such donations in excess of 10% of the adjusted gross total income is ignored. The qualifying limit is 10% of ₹ 1,50,000 = ₹ 15,000, so only ₹ 15,000 of the ₹ 20,000 donation qualifies, and the deduction is 50% of ₹ 15,000 = ₹ 7,500. The donation is made by cheque, which satisfies section 133(5) (a donation over ₹ 2,000 must be paid otherwise than in cash). The deduction is available because X has opted out of the default regime [section 202(2)(a)(xii)]. ₹ 10,000 ignores the qualifying limit, ₹ 15,000 ignores the 50% rate, and ₹ 20,000 is the whole donation.
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UGC NET Commerce