Table of Contents
Introduction
Section 80G of Income Tax Act provides tax deductions for donations made to eligible charitable organisations and institutions. According to section 80G, any donation made to a registered charity or trust will be considered for deduction under this section. In addition, section 80G also contains provisions for deduction from income tax on contributions made towards scientific research and rural development. This article will explain everything about Section 80G, what donations are eligible under this section, and the 80G exemption list.
What is Section 80G of Income Tax Act?
Section 80G Income Tax Act 1961 is a tax deduction scheme under which taxpayers can claim deductions from their total gross income for donations to eligible charitable organisations and institutions. The amount deducted will depend on the type of donation and whether the government has approved it.
Mode of Payments for Donations under Section 80G
Taxpayers can donate to eligible charitable organisations and institutions through cash, cheque or demand draft. The donation should be made directly and not routed through a third party. In addition, donations can also be made by way of bank transfers. It is important to ensure that all payments are made with proper bill receipts to ensure that 80G deduction can be claimed.
Amendments to section 80G Income Tax Act from 2017-18 allow taxpayers to avail of deductions for payments made using digital modes like net banking, debit/credit cards, mobile wallets and other modes as specified by the Central Board of Direct Taxes (CBDT). Donations above Rs.2,000 must be made using digital payments to get the deduction.
How to Claim the Deduction?
To claim the deductions, the following details are to be provided:
● Name of the donee/donee organisation
● PAN of the donee
● Address and contact details of the donee
● Mode of payment used for making donations
● Amount donated
Taxpayers must submit a duly filled Form No. 10G and their income tax returns to avail of 80G deductions. Ensuring all details mentioned in the form are correct and complete is important.
In addition, taxpayers can also provide their bank account statement, receipt or challan as documentary evidence of donations made to eligible charitable organisations and institutions.
Once the deduction has been claimed, the taxpayer must note the amount deducted on Form No. 10G of the income tax return form. The taxpayer must then attach the duly filled Form No. 10G and their income tax returns.
List of Donations that are eligible for 100% deduction without the qualifying limit Under Section 80G and 80GGA
The following donations are eligible for a 100% deduction without qualifying limit under sections 80G and 80GGA:
● Donations made to approved organisations in India.
● Donations made to political parties or the electoral trust in India.
● Donations that are made to funds established by the Central Government, such as the National Defence Fund, National Foundation for Communal Harmony, etc.
● Donations made to the Prime Minister's National Relief Fund or any fund set up by the state government or authorised local authority.
● The donations made to approved universities, institutes of higher education or research institutions in India.
● Donations made to approved hospitals in India.
● Donations made to the National Illness Assistance Fund.
● Donations made to approved charitable or religious trusts in India.
● The ones made to any fund set up in India for the welfare of the armed forces personnel, ex-servicemen or their dependents.
● Donations that are made to any trust or institution established in India for the welfare of handicapped or disabled persons.
● Donations made to any trust or institution established in India as a war memorial.
● Donations made to any authority constituted by the Central, State Government or Local Authority in India for promoting family planning.
● Donations made to any trust or institution established in India for scientific research.
● Donations made to any trust or institution established in India for educational purposes.
● Donations made to an approved Rural Development Fund set up in India by Central Government, State Government or Local Authority.
Taxpayers must ensure that the donations are made to valid organisations and trusts to avail of a 100% deduction under sections 80G and 80GGA. All receipts or challans should be properly maintained to claim the deductions.
List of Donations that are eligible for 50% deduction without qualifying limit Under Section 80G and 80GGA
● Donations made to approved funds, charitable institutions or trusts registered with the Central Government.
● Donations made to any fund established by a local authority to promote family planning in India.
● Donations made to any fund set up by the Central Government or a State Government.
● The donations that are made to any trust, institution or fund established for charitable purposes in India.
● The ones made to notified universities and research institutions in India.
● Donations made to notified hospitals in India.
● Donations made to any trust or institution established in India for the welfare of the Scheduled Castes and Scheduled Tribes.
● Donations made to any trust or institution established outside India approved by the Central Government of India.
● Donations made to any fund set up by a public sector company for charitable purposes in India.
Maximize your donations with a 50% deduction! This list outlines all eligible contributions that can be deducted without caps or restrictions.
Beginning in the 2023-2024 financial year, contributions to Jawaharlal Nehru Memorial Fund
Rajiv Gandhi Foundation and Indira Gandhi Memorial Trust, and will no longer be deductible. However, donations made to Prime Minister's Drought Relief Fund will still be eligible for deduction.
List of Donations eligible for 100% deduction which are subject to 10% of adjusted gross total income
The following donations are eligible for 100% deduction which are subject to 10% of adjusted gross total income under section 80G and 80GGA:
● Donations made to the Prime Minister's National Relief Fund.
● Donations that are made to any fund set up by the Central Government or State Government exclusively to provide relief to victims affected by natural calamities.
● The donations made to any fund set up by a State Government for providing medical relief to poor people in India.
● Donations made to an approved university or institution for research in social science or statistical research.
● Donations that are made to the Indian Olympic Association or any other association established for the training of sports personnel.
● Donations made to a National Defence Fund set up by Central Government in India for the welfare of ex-servicemen or their dependents.
● Donations made to any trust or institution established in India for the welfare of handicapped persons.
● Donations made to a notified fund or any trust for the promotion of family planning in India.
How do Deductions under Section 80G Benefit Different Types of Taxpayers?
|
Type of Taxpayers |
Benefits |
|
All taxpayers |
50% deduction without qualifying limit for some donations. 100% deduction which are subject to 10% of adjusted gross total income for some donations |
|
Senior Citizens |
Additional deductions on the interest income from deposits in banks, post offices, and financial institutions |
|
Women |
Deduction on rent paid if not getting house rent allowance (HRA). Deduction on medical expenses incurred for certain specified illnesses |
Documents Required to Claim Deductions under Section 80G
To claim a deduction under section 80G, taxpayers must provide the following documents:
● A receipt or certificate of donation issued by the institute/ organization.
● Copy of PAN issued by the Income Tax Department to the donor and done (except if donated through online transactions).
● Bank details of donee mentioned in the receipt or certificate of donation.
● Copy of the return filed in the previous year (if any).
● Any other documents as may be specified by the Assessing Officer.
Process to Claim Deductions
Taxpayers are required to follow the below steps to claim deductions under section 80G:
1. Make donations to eligible funds or charitable trusts.
2. Obtain a valid receipt or certificate of donation from the donee institution/ organization at the time of donation.
3. Submit all relevant documents required for claiming deduction while filing an income tax return.
4. Calculate the amount of deduction allowable under section 80G.
5. Claim deductions on eligible donations to approved funds or charitable trusts in the applicable income tax return form.
6. Submit the return and make payment of taxes, if any due, using the payment link provided by the e-filing website.
7. Retain the acknowledgement of filing the income tax return for future reference.
By following these steps, taxpayers can easily claim a deduction under section 80G of Income Tax Act and avail the associated benefits.
Section 80GGA
Section 80GGA of the Income Tax Act provides deductions for taxpayers who donate to certain eligible funds, trusts and institutions. This section applies only to individuals or HUFs and not to firms or any corporate body. The deduction under Section 80GGA is allowed when a taxpayer donates scientific research or rural development.
List of Donations Eligible Under Section 80GGA
● Contributions/ donations made to notified funds or institutions established in India for scientific research or rural development.
● Contributions/ donations made to the National Urban Poverty Eradication Fund.
● Payments made to certain approved universities, colleges and institutes of technology.
Payments made to approved hospitals and research institutes for medical research.
How to Calculate 80GG?
To calculate a deduction under section 80G, taxpayers must subtract the eligible donations from 10% of their adjusted gross total income. The 80G deduction is subject to a maximum limit of Rs. 20,000/- per annum and should be claimed in the applicable income tax return form while filing returns.
Adjusted Total Income
Adjusted total income is the sum of all a taxpayer earns in an assessment year after deducting certain specified allowances. It includes salary income, house property income, capital gains, business or professional income and other sources of income. The adjusted total income is used to calculate deductions under section 80G.
Frequently Asked Questions
Yes, you can claim the deduction when filing your returns. To do so, you must submit all relevant documents required to claim the deduction. Also, ensure that the donation is made to an eligible fund or charitable trust and calculate the deduction allowed under section 80G before filing your returns.
No, partnership firms are not eligible to claim a deduction under section 80G of the Income Tax Act. The section applies only to individuals or Hindu Undivided Family (HUFs) and not to firms or any corporate body.
Yes, non-residents can claim a deduction under Section 80G for donations made to Prime Minister's Relief fund. However, you need to submit a donation certificate from the donee institution/ organization at the time of donation and all relevant documents required for claiming deduction while filing your income tax return.
Section 80GG of the Income Tax Act, 1961 provides deductions for taxpayers who do not receive any House Rent Allowance (HRA) from their employers and pay rent to occupy a residential property. The deduction is available only to individuals or HUFs who receive salary or pension income and are not liable to file a Business/ Profession income tax return.
The maximum deduction available under Section 80GG is Rs 60,000 per annum. This amount is calculated by subtracting 10% of the taxpayer's adjusted gross income from the actual rent paid in a financial year.
No, partnership firms cannot claim deductions under Section 80G of the Income Tax Act. The section applies only to individuals or HUFs and not to firms or any corporate body. However, donations to eligible funds and institutions can qualify for deduction under other Income Tax provisions such as Section 80GGA or 80GGC.
No, taxpayers cannot claim both HRA and deductions under Section 80GG at the same time. However, depending on their eligibility, they can claim deductions under section 80GG or HRA.
No, tax benefits under section 80G are not applicable to Non-Resident Indians. NRIs cannot claim a deduction for donations to eligible funds or institutions in India. However, they can claim a deduction for investments/ contributions made in specified pension schemes under Section 80CCC of the Income Tax Act.
No, taxpayers cannot claim both 80GG and HRA at the same time. They can claim deductions under section 80GG or HRA depending on their eligibility. If taxpayers are eligible for both, they can select which deduction to avail of in the assessment year as per their individual requirements.
No, deductions under section 80G are not applicable in the new taxation regime. The new taxation regime does not provide for any deductions related to donations made to eligible funds and institutions. However, taxpayers can avail of tax benefits by investing/ contributing towards specified pension schemes such as National Pension Scheme (NPS) and Atal Pension Yojana.