What is 80G in Income Tax? Giving to charity and helping the underprivileged in society in whatever way we can is our duty and is a commendable act. Donating to registered charitable causes and societies makes a difference, and the government also supports such noble deeds. Sec 80G of Income Tax Act 1961 is about donations to charitable organisations and recognised funds that provide tax deductions and exemptions (subject to conditions) made to them through donations in cash, cheque, or bank drafts.
What comes in Section 80G of Income Tax Act?
All contributions made to charitable institutions and relief funds are not eligible for tax deductions under the Income Tax Act. However, some donations made to charitable institutions and relief funds are claimable as deductions under the Income Tax Act Sec 80G. Let's then quickly look at the conditions attached to claim such donations as tax deductions.
A donation to a charitable institution or relief funds that is claimable as a deduction under the Income Tax Act Sec 80G has to be:
- A deduction that any taxpayer can claim, including companies, individuals, firms and other legal entities.
- Only such donations made to funds prescribed by the IT Act qualify for tax deductions under Section 80G in Income Tax.
Mode of payment for donation in Income Tax:
The donation in Income Tax must be made through cash, draft, or cheque to claim tax deductions on the contribution. However, such cash payments made as donations in cash should not exceed Rs 10,000/-. It is worth noting that many people make donations in materials, food, medicines, stationery, books, etc. These do not qualify for tax deductions under the IT Act U/C 80G.
From the Financial Year (FY) 2017-2018 onwards, Section 80G of Income Tax Act states that any cash donations made to recognised charitable funds exceeding Rs 2000/-, cannot be claimed as a tax deduction. To qualify for tax exemptions, the donations exceeding Rs 2000/-, can be made in any other mode like bank drafts, cheques etc.
Also Read: Section 80GG - Claim Deduction for Rent Paid
Donation Income Tax limits:
Under 80G in Income Tax Act, several donations specified under it are eligible for tax deductions with a limit of 50% or 100% without or with restrictions laid out under it.
How to claim the 80G income tax deduction?
To claim the 80G income tax deductions, you will need to file your ITR or Income Tax Returns and claim the deduction under Section 80G of Income Tax Act by providing the following details:
- Donee or fund donated to name;
- Donee’s PAN;
- The donee’s address;
- The amount donated or contributed.
List of Donations for 100% tax deduction with no qualifying limit:
The list of donations you can claim 100% deductions on with no qualifying limits are:
- The Central Government’s National Defence Fund
- The National Foundation for Communal Harmony
- The Prime Minister’s National Relief Fund
- Any approved eminent educational institution or university.
- The National Illness Assistance Fund
- State or UT Government’s fund undertaking medical relief to the poor
- The District’s Zila Saksharta Samiti constituted under the chairmanship of the District’s Collector.
- The State Council for Blood Transfusion or the National Council for Blood Transfusion.
- Any National Trust providing for relief and the welfare of persons with Cerebral Palsy, Autism, Multiple Disabilities and/or Mental Retardation
- The National Cultural Fund
- The National Sports Fund
- The National Children’s Fund
- Any State/Union Territories CMs or Chief Minister’s Relief Fund
- The Fund for Technology Application and Development
- Any State/Union Territories Lieutenant Governor’s Relief Fund
- The Indian Naval Benevolent Fund or the Army Central Welfare Fund, or the Air Force Central Welfare Fund
- The October 1st and October 6th Maharashtra CMs or Chief Minister’s Relief Fund
- The 1996 Andhra Pradesh CMs Chief Minister’s Cyclone Relief Fund
- The Maharashtra CMs or Chief Minister’s Earthquake Relief Fund
- Any State Government of Gujarat fund set up for providing relief exclusively to the earthquake victims of the Gujarat earthquake
- The PMs or Prime Minister’s Earthquake Relief Fund for Armenia
- Any fund, institution, and trust U/S 80G(5C) for providing relief to victims of the earthquake in Gujarat (This applies to contributions made from 26th January 2001 to 30th September 2001).
- The FY 2014-2015 onwards Swachh Bharat Kosh Fund
- The Africa Fund for Public Contributions from India
- The FY 2015-2016 onwards National Fund for Control of Drug Abuse
- The FY 2014-2015 onwards Clean Ganga Fund
Donations eligible without qualifying limit for 50% Tax Deduction:
The funds eligible for a 50% tax deduction with no qualifying limits are very few and include the below mentioned funds:
- Rajiv Gandhi Foundation
- Prime Minister’s Drought Relief Fund
- Jawaharlal Nehru Memorial Fund
- Indira Gandhi Memorial Trust
Adjusted total income for 80G:
What is meant by adjusted total income? The adjusted gross income is the total gross income (Gross total income = sum of income under all relevant heads in the ITR) reduced by the total or aggregate of the following deductions.
- Deductions U/S 80CCC all the way up to Sec 80U but excluding Sec 80G.
- Income that is exempt from tax deductions.
- Capital gains that are long-term in nature.
- Income as in Sections 115AB, 115A, 115AC, 115D, and 115AD related to foreign companies and non-residents.
Donations subject to 10% of Adjusted Gross Total Income for 100% eligibility for tax deductions under Income Tax 80G:
The donations subject to 10% of Adjusted Gross Total Income for 100% eligibility for tax deductions are:
- Any donations to be utilised for the sole purpose of promoting family planning by any local approved institution, authority, association or the Central or State governments.
- Any donation made by a company to any notified association or institution established in India or the Indian Olympic Association. The fund is used solely to sponsor sports and games in India or the development of infrastructure for games and sports in India.
Donations subject to 10% of Adjusted Gross Total Income for 50% eligibility for tax deductions under 80G Income Tax:
The list of donations subject to 10% of Adjusted Gross Total Income for 50% eligibility for tax deductions under Section 80G Income Tax are:
- Any institution fund or any other fund satisfying the conditions laid out in Section 80G(5)(vi) of the Income-Tax Act 1961.
- Any local authority or Government fund to be solely utilised for any charitable purpose except to promote family planning.
- Any fund under Consolidated Fund of India to satisfy and deal with the purpose of development, planning, and improvement of towns, cities, villages etc. or the need for housing accommodation or both.
- Any fund of a corporation under Section 10(26BB) for promoting the minority community’s interest.
- A temple donation under Income Tax or a fund used for the renovation or repairs of any notified mosque, temple, church, gurudwara or other places of worship.
Donations eligible for tax exemptions under Section 80GGA of Income Tax Act:
The Income Tax 80GGA Section provides tax deductions for donations made towards rural development and scientific research. Any tax assessee can claim this deduction except for taxpayers who have an income from a profession and a business. The donations must be in the form of cash, bank drafts or in the form of a cheque.
Note that donations that exceed the value of Rs 10,000/- are not allowed for consideration under the tax deduction scheme. The donation payment is, however, 100% tax-deductible and applies to the entire contribution.
The donations eligible for tax deductions under Section 80GGA are:
- Any sum paid as a donation to a university, college, research association, or other institution that undertakes scientific research and is approved and recognised by the prescribed authority U/S 35(1)(ii).
- Any sum paid as a donation to a university, college, research association, or any other institution undertaking statistical research or social science research and is approved and recognized by the prescribed authority U/S 35(1)(iii).
- Any sum paid as a donation to an approved institution or association that undertakes rural development programs or trains persons to implement rural development programs and is recognised or approved U/S 35CCA.
- Any sum paid as a donation to a local authority, an approved institution or association or a public sector Company carrying out the schemes or projects approved U/S 35AC.
- Any sum paid as a donation to a notified fund for Rural Development.
- Any sum paid as a donation to a notified fund which is used for afforestation schemes.
- Any sum paid as a donation to a notified fund for National Poverty Eradication.
If income tax deduction under section 80GGA has already been provided, then donations or expenses are not eligible for further tax deductions under any of the other provisions available in the Income Tax Act 1961.
Paying Income tax and filing the ITR or Income Tax Returns is a daunting task for most people. Section 80G of Income Tax Act 1961 is about donations to charitable organisations or recognised funds that provide tax deductions. It also talks about the exemptions made to recognised and registered funds and charitable organisations using donations in cash, bank drafts or cheques subject to certain conditions.
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