A few days back I was browsing the internet and stumble upon an article discussing about Section 80G. You can read in detail about this section in this
article. When you go through the article you will find a heading,
what is the mode of payment under Section 80G?. It is written that cheque, DD & cash are accepted mode of payments. It was clear at that time that cryptocurrency is not an accepted mode of payment.
But, what happens when I convert crypto to INR and transfer it to my bank account. Using my bank account I can donate some money to eligible funds or NGOs. Now, the question that came to my mind can I avail tax benefits under this section? To find an answer I did a thorough check online but found nothing. I then checked with one of my friend who is good with taxes.
He said that "As of now, the Reserve Bank of India (RBI) regulates all cryptocurrency transactions that occur within India. While this covers general transactions involving cryptos. it unfortunately doesn't yet apply specifically to charitable donations". Which I was aware of after reading the article.
Now, here comes the good part! He said, "If you contribute to eligible causes using Indian Rupee, you could qualify for deductions, if they are made to organiations recognized by the Government. Keep copies of your financial transactions and submit those official proof of donation and you might get tax advantages.
What do you guys think? Is this a loophole?