Donation Tax Deduction under Section 80G and 80GGA

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After having exhausted all other means of reducing your income tax outflows, you are wondering if there is any avenue that you happened to miss out. If yes, then you have landed at the right place as Section 80G and 80GGA offers you that opportunity to save on paying tax while performing some good to the society. Interested to learn more? Read on.

What is Section 80G for?

Section 80 of the Income Tax Act lists all the deductions that can be claimed by the taxpayer while paying his or her income tax to the government. Section 80G highlights that contributions made to relief funds and charitable institutions can be claimed as deduction under the Act. Please note that only the prescribed funds as listed as recognised by law can qualify for deduction under this section.

What is the mode of payment?

A deduction under Section 80G can be made only when the contribution to the charitable institution or fund has been made via a cheque or a draft or in cash for a maximum amount of INR 2,000. Charitable contributions made in kind are ineligible for claiming the said benefit.

How can you claim the deduction?

All taxpayers, irrespective of whether it is an individual, a company, a firm or any other person recognised by the act, can claim the deduction by submitting the following details in the income tax returns document –

a.       Name of the donee.

b.       The PAN card details of the donee.

c.       The address and contact details.

d.       The amount that has been given to the charitable institution or fund and details of that institution or fund.

What are the donations eligible for 100% or 50% deduction without qualifying limit?

Donations eligible for 100% deduction without qualifying limit

·         National Defence Fund set up by the Central Government

·         Prime Minister’s National Relief Fund

·         National Foundation for Communal Harmony

·         An approved university/educational institution of National eminence

·         Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district

·         Fund set up by a State Government for the medical relief to the poor

·         National Illness Assistance Fund

·         National Blood Transfusion Council or to any State Blood Transfusion Council

·         National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities

·         National Sports Fund

·         National Cultural Fund

·         Fund for Technology Development and Application

·         National Children’s Fund

·         Swachh Bharat Kosh (applicable from FY 2014-15)

·         Clean Ganga Fund (applicable from FY 2014-15)

·         National Fund for Control of Drug Abuse (applicable from FY 2015-16) etc.

Donations eligible for 50% deduction without qualifying limit

·         Jawaharlal Nehru Memorial Fund

·         Prime Minister’s Drought Relief Fund

·         Indira Gandhi Memorial Trust

·         Rajiv Gandhi Foundation

 

What are the donations eligible for 100% or 50% deduction subject to 10% adjusted gross total income?

Donations eligible for 100% deduction subject to 10% adjusted gross total income

·         Donations to the government or any approved local authority, institution or association to be utilized for the purpose of promoting family planning.

·         Donation by a Company to the Indian Olympic Association or to any other notified association or institution established in India for the development of infrastructure for sports or sponsorship of sports in the country.

Donations eligible for 50% deduction subject to 10% adjusted gross total income

·         Any other fund or any institution that meets the conditions mentioned in Section 80G(5).

·         Government or any local authority, to be utilized for any charitable purpose other than the purpose of promoting family planning.

·         For repairs or renovation of any notified temple, mosque, gurudwara, church or other places etc.

 

What is adjusted total gross income?

Gross Adjusted income, in simple mathematical terms, is calculated as –

Gross Adjusted income = Gross Total Income – (all exempted incomes + long-term capital gains + all deductions under section 80C to 80U except for 80G)

What is Section 80GGA for?

Section 80GGA, is a more specific kind of a deduction, wherein the taxpayer can avail a deduction if he or she makes donations toward scientific research or rural development. The entire amount that is donated is eligible for deductions as per this section.

What are the donations eligible under Section 80GGA?

·         Amounts paid to a research association, college, university or any other institution to be used for –

a.       scientific research as approved by the prescribed authority under Section 35(1)(ii)

b.       social science or statistical research as approved by the prescribed authority under Section 35(1)(iii)

·         Amounts paid to an approved association or institution which undertakes any program of –

a.        rural development and is approved under Section 35CCA

b.       Training of persons for implementing programs of rural development

·         Amount paid to –

a.       notified Rural Development Fund

b.       notified Fund for Afforestation

c.       notified National Poverty Eradication Fund

·         Amount paid to a public sector company, local authority or an approved association or institution which carries out projects or schemes approved under Section 35AC.

FAQs

·         Can a partnership firm make a claim deduction under 80G?

Yes, as the act recognises the right of an individual, company or firm to claim under Section 80G.

·         Can I claim both House Rent Allowance and 80G?

A claim cannot be made under both HRA and 80G – those who are paying rent but not receiving a HRA can claim under Section 80G. If the individual or his or her spouse or children own a property in the place of employment, then this deduction cannot be availed.

Conclusion

Donations made to foreign trusts, political parties and non-notified institutions cannot be claimed under these sections for deduction. Be vigilant and up to date with the deductions that are available and use it to your benefit. Be meticulous in the documentation to ensure that the claim is easily processed by the income tax department.

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