INCOME TAX

Deduction of tax at source from salaries under section 192 of the Income-tax Act, 1961--Donations made to Chief Minister's Earthquake Relief Fund, Maharashtra--Instruction regarding deduction under section 80G of the Income-tax Act, 1961

Circular No. 678

Dated 10/2/1994

In the wake of the unfortunate earthquake which caused widespread devastation in certain areas of Maharashtra in the month of September, 1993, the Government of India has issued a Press Note informing the general public that all donations made to the Chief Minister's Earthquake Relief Fund, Maharashtra, will qualify for 100% deduction, without any ceiling.

2. It was also stated in the Press Note that all donations made to the Chief Minister's Relief Fund for earthquake relief, prior to the setting up of the fund mentioned in para 1 above, would also qualify for 100% deduction.

3. The Board have been receiving queries from various quarters as to whether the Drawing and Disbursing officers can allow 100% deduction of the aforesaid donations from salaries, under section 80G of the Income-tax Act, 1961, while computing the tax liability of the employees who make such donations. The Board have decided that the DDOs can do so in the case of all donors upon being satisfied about the amount donated and the evidence of its receipt by the fund.

4. In cases where the employees of an organisation make donations to the aforesaid fund(s) through their employers, that is, by deduction from their pay through the pay bill, it is quite possible that the amounts so deducted would be sent in lump sum to the fund and the fund would issue only one receipt for the same to the employer. In such cases the employer shall furnish to the Fund a list showing the names and designations of the donors, and the amount donated individually, along with the cheque for the lump sum donation and have the list counter signed by the Fund. Besides, allowing 100% deduction at his level, wherever permissible, the employer should issue a certificate to the concerned employee(s) stating the amount of deduction made, the number and date of the pay bill and the number and date of the cheque by which the lump sum amount including the donation made by the concerned employee(s) was paid to the fund, so that the same could be filed by the concerned employees with their returns of income, if necessary.

5. There would be no upper ceiling for the purpose of deduction in respect of the amount donated to the fund mentioned in paras 1 and 2 above. It may, however, be noted that no deduction will be allowed if the sum donated is less than Rs. 250.

6. Necessary amendment to section 80G of the Income-tax Act will be made shortly. Meanwhile, the DDOs can allow deduction in respect of donations made during the current financial year (1993-94) to the fund mentioned in paras 1 and 2 above.

7. Copies of this circular will be available with the Directorate of Income-tax (RSP & PR), Sixth Floor, Mayur Bhavan, Connaught Circus, New Delhi-110 001.

8. Hindi version will follow.

(Sd.) B. D. Sinha,

Deputy Secretary to the Government of India.