The current state of crisis, brought about by the spread of the novel coronavirus, COVID-19, has caused widespread panic within the international community. Apart from causing a large-scale healthcare emergency, COVID-19 has also placed immense stress on countries’ economies – which has led to a market crash. In the midst of this situation, a nation like India has to rely on the compassion of its citizens to ensure the well being of the country and the people who call it home. In this regard, the PM CARES Fund (Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund) was established to help deal with the difficult task of managing resources for the less fortunate and marginalised communities; providing the best treatment to all coronavirus patients in the country; and helping to keep the economy stable. 

Should I contribute towards the PM CARES Fund?
Donations and charitable giving are humanitarian acts that everyone with the means should indulge in, especially during a time of crisis. In line with this, the centre has tried to motivate all citizens to make contributions towards the PM CARES Fund by providing certain tax benefits. As of March 31st, the centre announced that all contributions made towards the fund will be eligible to receive 100 per cent deduction under Section 80G of the Income Tax Act. Furthermore the standard limit of 10% would also not apply to contributions made towards the fund. So the total amount of tax that you can save by contributing to the PM CARES Fund will be with respect to your particular income tax slab.

Who can avail of this benefit?
If you can recall, the tax regime has undergone a change this year. Taxpayers were given the option to select between two regimens; one with deduction (old regime) or another with reduced tax rate but without any deduction benefit (new regime). An important point to remember regarding your donation to the PM CARES Fund is that only those individuals who choose to continue with the old regime can claim deductions on their contribution. If you have opted for the new regime, you won’t be able to claim these deductions. However this shouldn’t make you reconsider your decision to give altogether, as even a small amount can go a long way to help the current situation the country faces.

How can I use the tax benefits of my donation most efficiently?
If you choose the old regime, and decide to make a sizable contribution towards the PM CARES Fund, here’s how you claim your deductions most efficiently. The government has given the option of claiming your deduction either in the fiscal year 2019-20 or 2020-21. However, if you make two separate donations, then you will be able to make one claim each, for both fiscal years 2019-20 and 2020-21 separately. To make both claims separately, it is imperative that one contribution is made before the extended deadline of June 30th, and one after the same date. This way, you can opt to claim deductions for your first donation in 2019-20 and the second one automatically gets taken towards 2020-21.

So don’t wait to make your donation towards the PM CARES Fund, especially if you have opted to pay your income taxes under the old regime. Apart from providing your country the much needed support it needs during these tough times, it can also be used as a tool to improve your tax efficiency. If your employer has already made a contribution towards the fund in your name, ensure that the details of the same are present on your Form 16.