Can you Save Tax through Crypto Donation under Section 80G

[pakhitheboss]

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?

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[elevates]

I doubt it! My understanding here is that the source of your earning makes it harder. Since your source of earning is from crypto you would incurr a flat highest tax slab. I would prefer to talk to a CA or an expert in this matter. The person who can answer your question is @webtricks. I hope he can share some of his experience with regards to Section 80G. By the way if this works then it is a loophole within the tax system.

[pakhitheboss]

I doubt it! My understanding here is that the source of your earning makes it harder. Since your source of earning is from crypto you would incurr a flat highest tax slab. I would prefer to talk to a CA or an expert in this matter. The person who can answer your question is @webtricks. I hope he can share some of his experience with regards to Section 80G. By the way if this works then it is a loophole within the tax system.

Yeah! Rather waiting for webtricks I would suggest checking it with someone who knows or has good knowledge with tax as I did. My intention for posting this topic on our local board was to create awareness. It is better to do your own research rather wait for someone to reply.

If you have found an answer similar to mine or different then do reply to this thread as I am trying to find an answer here.

[webtricks]

I have explained two types of crypto incomes in this post: https://bitcointalk.org/index.php?topic=5448950.msg62095602#msg62095602. If your crypto income comes under the ambit of Section 115BBH then no deductions are allowed except the cost of acquistion, hence, deductions under Chapter VI-A (80G is a part of this) are also not allowed.

But if your crypto income is not taxable under section 115BBH then it will become a part of your regular total income and you can claim deduction for donations u/s 80G. However, there is another catch: the new regime doesn't allow any deduction u/s 80G so if you are paying taxes under new tax law then donations isn't helpful for you. Do consider this factor before doing the tax planning.

[pakhitheboss]

Thanks for clearing the doubt webtricks. The problem here would be to prove that I am getting paid through signature or bounty campaign. I think it is better for me to consult a CA and and then update this thread with the information I get from him/her. We still have until July to file our returns.

[Bureau]

If you have any further questions then I would recommend you to physically visit either a tax consultant or a CA. You cannot get all your answers from the forum members. They can only guide you as to what questions you need to ask from the pros.

[pawanjain]

I doubt it! My understanding here is that the source of your earning makes it harder. Since your source of earning is from crypto you would incurr a flat highest tax slab. I would prefer to talk to a CA or an expert in this matter. The person who can answer your question is @webtricks. I hope he can share some of his experience with regards to Section 80G. By the way if this works then it is a loophole within the tax system.

Yeah! Rather waiting for webtricks I would suggest checking it with someone who knows or has good knowledge with tax as I did. My intention for posting this topic on our local board was to create awareness. It is better to do your own research rather wait for someone to reply.

If you have found an answer similar to mine or different then do reply to this thread as I am trying to find an answer here.

It's good that you have made this post for awareness and it is serving the purpose.
From my personal perspective, I think converting crypto to INR would incur 30% flat tax as announced by the government.
After that, you should be able to donate the INR to a charitable organization and you should be able to claim tax benefits on that.

Further more, not all relief funds are subject to deductions. There's a list of funds which has no deductions, 50% deductions and 100% deduction.
The full list can be found in the link at bottom of this post. It also mentions that mode of payments are only cheque, demand draft or cash if the amount is less than 2000.

Source : https://cleartax.in/s/donation-under-section-80g-and-80gga

[avikz]

Webtricks has given the correct statement. But I want to add something to it. 

80G has a limit. You can not claim deductions even if you donate lakhs of rupees to recognised charitable trusts. You can only claim deductions of 10% of your adjusted gross income. That means, if you earn 5 lakh rupees, you can claim deductions only on 50,000 rupees. Doesn't matter if you donate your entire income, but no deduction can be availed beyond 10% of your total income.

The only way to avoid this tax is through gift vouchers which is not considered as income. But there is a limit as well.