Income Tax for donations by NRO account

POSTED BY rajeev singh ON April 2, 2013 3:40 pm COMMENTS (5)

Hi,

I am planning to open an NRO current account solely for charity where in I’ll be collectting small amounts from my family and friends and donating all the money collected to charity.

have got few questioins on this

– Is there anything illegal in this?

– What are the tax implications? I know if I dont donate the money I’ll be paying straight 30% tax but I have no intentions to do so as I’ll be donating all the money, also I’ll be publishing the complete account statement to my friends and family.

 

thanks

Rajeev

5 replies on this article “Income Tax for donations by NRO account”

  1. Dear Rajeev, such small gifts or donations from other ‘ll be treated your income from other sources & ‘ll become taxable the moment total amount crosses the 50K limit in a FY. here for example if you are receiving say 75000 Rs. in FY 2013-2014, full 75000 rs. ‘ll become your taxable income & ‘ll be added into your indian income & taxed accordingly.

    Personally I w’d ask you to create a charitable trust & receive the amounts directly into that. Please consult a CA or a tax professional for creating a charitable trust. this ‘ll save you from a lot of headache the way you are planning.

    thanks

    Ashal

  2. rajeev singh says:

    it will be mostly case to case basis and I’ll have to work that out.
    mostly will be around
    – online payments (NEFT, IMPS)
    – setting up automatic transfer in their accounts

    Still I would admit that I have not given enough thought on this. Also since the idea is in initial stage, I am still collecting different ideas from people.

    Apart from trouble for taxation from my end or headache from contributors end, do you see any issue in terms of legality of it (Though I’ll take a legal opinion before starting this) or is there any taxation issue?

    thanks
    Rajeev

  3. Dear Rajeev, thanks for the clarifications. Now I want to know, How your indian relatives or friends ‘ll be able to deposit such small amounts into your NRO account? Again is it not a headache for people around you?

    Thanks

    Ashal

  4. rajeev singh says:

    Thanks for responding Ashal
    there are multiple reason because of which I am ready for this complication
    – I can persuade my friends and family on a regular basis for the contribution (more of a selling based on relationship)
    – contribution is so small (100/- 200/-) per month that if they would try to do it by themselves, some of the organizations dont even consider that amount, and those who do would consider it more of a headache than contribution itself
    – Some of my friends and families are not that technology savvy and can rely on me for this contribution

    In gist sole purpose of this is to organize the small donations which people usually give to street side begger, or at the temples to make this more structured and meaningful which can really make a difference to someone needy (like a child education, support of blind etc.)

    Hope I have answered your concern.

    thanks
    Rajeev

  5. Dear Rajeev, why do you want to involve your bank account for the charities done by your friends & relatives? why do you want to complicate the taxation matter for yourself?

    Thanks

    Ashal

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