Introduction Charitable giving is one of the few areas of tax planning where doing good and saving taxes align perfectly. In both India and the US, the tax code provides significant incentives for charitable donations — but the rules are nuanced, and many donors leave substantial tax benefits unclaimed. In Day 12, we cover how […]
Charitable giving is one of the few areas of tax planning where doing good and saving taxes align perfectly. In both India and the US, the tax code provides significant incentives for charitable donations — but the rules are nuanced, and many donors leave substantial tax benefits unclaimed.
In Day 12, we cover how to maximise the tax efficiency of charitable giving in India and the US, advanced charitable strategies like Donor-Advised Funds and Charitable Remainder Trusts, and how cross-border philanthropists can navigate dual-country giving.
Under Section 80G of the Income Tax Act, donations to approved charitable institutions are eligible for deductions of 50% or 100% of the donated amount, subject to overall income limits.
– 100% deduction: Donations to Prime Minister’s National Relief Fund, National Defence Fund, certain national institutions
– 50% deduction: Donations to most approved trusts and NGOs
– Subject to overall limit: Total deductions under Section 80G cannot exceed 10% of gross total income (for most categories)
– No limit: Donations to government funds (100% deduction with no ceiling)
– Receipt from the charitable institution
– PAN of the institution
– 80G registration certificate details
Charitable Donation Deductions: USA
Under IRC Section 170, charitable contributions to qualified US organisations are deductible on Schedule A (itemised deductions).
– Cash donations: Deductible up to 60% of Adjusted Gross Income (AGI)
– Appreciated securities: Deductible at Fair Market Value (FMV), up to 30% of AGI
– Qualified Appreciated Stock: Donating highly appreciated stock avoids capital gains tax AND gets a FMV deduction — double benefit
– Qualified Charitable Distribution (QCD): IRA owners 70.5+ can donate up to $108,000 directly from IRA to charity; excluded from income
In 2026, the standard deduction is approximately $15,000 (single) / $30,000 (married). Only taxpayers who itemise can claim charitable deductions. Strategies to maximise itemised deductions:
– Bunch multiple years of donations into a single year to exceed standard deduction threshold
– Use a Donor-Advised Fund (DAF) for bunching
Donor-Advised Fund (DAF): The Power Tool for Charitable Planning
A Donor-Advised Fund is a charitable giving account maintained by a public charity (e.g., Fidelity Charitable, Schwab Charitable, Vanguard Charitable).
1. Donate cash or appreciated assets to the DAF
2. Take full charitable deduction in the year of contribution
3. Invest the funds for tax-free growth
4. Recommend grants to specific charities over time (no requirement to distribute immediately)
– Deduction now, giving later — perfect for bunching strategy
– Donate appreciated securities: avoid capital gains, deduct at FMV
– Simplify record-keeping: one donation receipt for the year
– Invest for potential growth before distributing to charities
Charitable Remainder Trust (CRT)
– Transfer appreciated assets to a trust
– Avoid immediate capital gains tax
– Receive income stream for life or a term
– Get a partial charitable deduction
– Remainder passes to charity
Cross-Border Charitable Planning
1. No cross-border deductibility: Indian charitable deductions only apply to donations to Indian-approved organisations. Donations to US charities are NOT deductible in India.
2. Similarly, US charitable deductions generally apply only to US-qualified organisations under IRC Section 501(c)(3).
3. India-US Charitable Exception: Some large US foundations (e.g., Aga Khan Foundation) have both US and Indian registered entities, allowing donors in both countries to claim deductions.
4. Donor-Advised Fund for Cross-Border Giving: A US donor can contribute to a DAF in the US and recommend grants to the DAF’s international giving program (which re-grants to foreign charities through qualified US intermediaries).
Charitable donation optimisation is not about giving less — it is about structuring giving to maximise both the social impact and the tax efficiency. For high-income individuals in India and the US, a well-structured charitable giving strategy can reduce effective tax rates by 2-5 percentage points.
In Day 13, we explore International Holding Company Strategy — how to select and structure holding companies for multinational groups to optimise dividend flows, capital gains treatment, and DTAA access.
Moiz Ezzi is a Certified Public Accountant (CPA) and Chartered Accountant (CA) specialising in cross-border tax advisory for multinationals, NRIs, and non-US founders with India-US and India-global operations. He advises clients across transfer pricing, international holding structures, DTAA planning, and entity structuring.
Connect with Moiz Ezzi on LinkedIn for weekly cross-border tax insights.
