Annually I give Rs 2 lakh to different charities as part of my religious beliefs. I maintain a different account for this activity. My chartered accountant shows the withdrawals from this account under the ‘cash withdrawal’ head every year. Can I show these withdrawals under any other income tax head, which works out to be more economical for me?
Sohail Mehdi, Mumbai
When you do an act of charity in your own right as an individual, the amount you spend for the purpose is treated as your personal drawings according to income tax rules. Therefore, the accounting treatment of withdrawals by your chartered accountant is absolutely correct.
However, if you donate a part of your income up to a maximum of 10 per cent of your gross total income to the funds and the institutions approved under Section 80G of the Income Tax Act, you get a deduction of 50 per cent or 100 per cent depending on the fund you chose of the qualifying sum of donations from your taxable income. So, if it does not interfere with the purpose of your charity, you may donate to the approved institutions and get a deduction under Section 80G.
