Employees Can Claim A 100% Deduction On Donations Made To PM-CARES Fund Via Employers

The government has said employees can claim 100% tax relief on donation to PM-CARES Fund. The employees can get relief on the donation made through their employer by mentioning it in their Form-16, the CBDT(Central Board of Direct Taxes) said in a clarification.

CBDT-the apex policy-making body of the income tax legislation in India issued a clarification saying that since the tax department will not be able to issue tax deduction certificates to all, especially employees making a contribution through employers, “will be admissible under Section 80G on the basis of the form 16/certificate issued by the DDO(Drawing & Disbursing Officer)/employer.”

“In cases where donation is made to the fund by an employee through an employer, the fund may not be able to issue a separate certificate to every such employee in respect of the donation so made, as the contributions made to the fund are in the form of a consolidated payment,” said in a clarification circular, issued on April 9.

The donation to the PM-CARES Fund would be eligible for complete tax deduction under Section 80-G of the Income Tax Act, the government statement said. An earlier decision of allowing was only a 50% tax deduction.

It also provided a big relief to taxpayers with respect to their pending applications for lower or nil deduction of TDS(Tax Deducted at Source) or TCS(Tax Collected at Source) by extending the validity of the certificates issued for FY20 to June 30, 2020.

Even certificates of those assesses, who have not been able to apply for lower or nil deduction certificates for FY21 but were issued such certificates for FY20, will be valid till June 30, 2020.

The tax department amended the provisions of the Income-tax Act to provide the same tax treatment to PM CARES Fund as available to Prime Minister National Relief Fund. Therefore, the donation made to the PM CARES Fund shall be eligible for a 100% deduction under section 80G of the IT Act.

Amit Maheshwari, Partner, AKM Global stated, “This is an important clarification as there was apprehension in the minds of several employees as to how they would get the benefit after contributing to this noble clause. This clarification has made the availing tax benefit simpler for them now. We hope this will lead to more donations to the PM Cares fund.”

Ved Jain, former president of ICAI said, “This clarification by CBDT is very timely and will encourage all employees both in public and private sector to contribute to PM Cares Fund through their employer by forgoing salaries, if not more, then at least 1 day.”

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