Donations Eligible Under Section 80G and 80GGA

Contributing to charitable causes is an incredible way to give back to society in the form of donations. When individuals go the extra mile, the government also does its bit to recognise the charitable aspect of such actions. It extends strong support for charitable causes in the form of tax deductions on the amount contributed. Section 80G and Section 80GGA are the steps in this direction. 

Section 80G of the Indian Income Tax Act provides deductions in taxes on contributions made to any fund or institution undertaking for charitable purposes. It allows the claiming of deductions, other than those available under Section 80C, hence providing an excellent opportunity for increasing tax savings by actively being engaged in acts of philanthropy. Through Section 80G, a contribution could be made towards the betterment of society. At the same time, taxpayers can utilise the same for financial planning through such giving.

Section 80GGA is more specific in this context. Donations made to certain programs for rural development and scientific research are 100% tax deductible under Section 80GGA. This deduction has two purposes: it promotes scientific achievements and rural development while also encouraging individuals to make charitable contributions. In this article, we will explain Section 80G and Section 80GGA in detail, highlighting the potential impact of these deductions on a taxpayer’s liability. 

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Table Of Contents

Recent Updates from Budget 2023

What is a deduction under Chapter VI of the Income Tax Act?

Who is Eligible for deduction under section 80G

Prescribed Modes of Payment

How to Claim Deduction on ITR

List of donations eligible for 100% deduction without qualifying limit

List of donations eligible for 50% deduction without qualifying limit

List of donations eligible for 100% deduction subject to 10% of adjusted gross total income

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

What is adjusted Gross Total Income?

To claim a tax deduction under Section 80G, individuals must have the following essential documents:

What is the deduction under Section 80GGA?

The list of donations eligible under Section 80GGA includes:

Most Asked Questions

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Recent Updates from Budget 2023

The donations made to the specified funds are no longer eligible for deductions under Section 80G as per the provisions outlined in the Budget for 2023.

• National Defense Fund

• Prime Minister’s National Relief Fund

• The National Foundation for Communal Harmony

• National/State Blood Transfusion Council

Donations which are eligible for 50% deduction without any qualifying limit:

• Jawaharlal Nehru Memorial Fund

• Rajiv Gandhi Foundation

• Indira Gandhi Memorial Trust

• Prime Minister's Drought Relief Fund

What is a Deduction Under Chapter VI of the Income Tax Act?

Deductions under Chapter VI of the IT Act include those sections which provide for deductions that may be claimed by the taxpayer to reduce taxable income, thereby reducing the tax liability. These deductions are given to encourage certain kinds of activities or investments made by the individual, which will improve his lot or the general economic development. Key sections under Chapter VI are as follows:

• Section 80C: Deductions for Investments under Specified Financial Instruments like PPF, NSC, Life Insurance Premiums.

• Section 80D: Deductions on health insurance premiums.

• 80E. Deduction in respect of interest on loan taken for higher education.

• Section 80G: Deduction under general donations Donations to Specified Charitable Institutions and Relief Funds.

Who is Eligible for deduction under section 80G

The eligibility for deduction under Section 80G includes

• Individuals 

• Hindu Undivided Firm (HUF)

• Companies 

• Firms 

• Non-Resident Indian (NRI)

• Any other person

Notably, not all contributions are eligible for deductions under Section 80G. Only donations through prescribed modes qualify for this deduction.

Note: Deduction is only for Taxpayer opting for Old Tax Regime

Prescribed Modes of Payment

1. Cheque 

2. Demand draft 

3. Cash (for donations below Rs 2,000)

Any Payment in cash above 2000 will not qualify for the deduction.

How to Claim Deduction on ITR

To claim a deduction under Section 80G of the Income Tax Act for donations made to specified funds or charitable institutions, follow these steps:

• Make Eligible Donations: Ensure that you make donations to organisations that are approved and registered under Section 80G of the Income Tax Act. Not all donations qualify for deductions.

• Obtain Receipts: Collect and retain the donation receipts or certificates provided by the recipient organisation. The receipt should include details such as the name and address of the organisation, registration number, and the amount donated.

• Verify Valid 80G Registration: Check that the organisation to which you have made a donation has a valid and current registration under Section 80G. You can verify this on the official Income Tax Department website.

• Report the Donation in Income Tax Return (ITR): While filing your income tax return, report the eligible donation under the relevant section (e.g., Section 80G) in the ITR form.

• Enter Details in ITR Form: In the ITR form, you will typically find a section where you can enter details of deductions claimed. Provide the necessary information about the donation, such as the name of the donee, PAN of the donee, and the amount donated.

The information pertaining to donations eligible for deduction under Section 80G needs to be recorded in the corresponding tables provided in the Income Tax Return (ITR):

• Table A: For donations that qualify for a 100% deduction without any specified limit.

• Table B: For donations that qualify for a 50% deduction without any specified limit.

• Table C: For donations that qualify for a 100% deduction, subject to a specified qualifying limit.

• Table D: For donations that qualify for a 50% deduction, subject to a specified qualifying limit.

Ensure that you accurately fill in the required details in the respective tables, specifying the nature of the donation, the name and details of the donee (charitable organisation), the amount donated, and any other relevant information. 

• Calculate Deduction: The deduction allowed under Section 80G may vary, so calculate the eligible amount for a deduction based on the prescribed limits and conditions.

• Submit the ITR: After providing all the necessary details, submit your income tax return.

• Keep Records: Retain all relevant documents, including donation receipts and a copy of the filed income tax return, for future reference.

List of donations eligible for 100% deduction without qualifying limit

1. National Defence Fund set up by the Central Government

2. Prime Minister’s National Relief Fund

3. National Foundation for Communal Harmony

4. An approved university/educational institution of National eminence

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

6. Fund set up by a state government for medical relief to the poor

7. National Illness Assistance Fund

8. National Blood Transfusion Council or any State Blood Transfusion Council

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

10. National Sports Fund

11. National Cultural Fund

12. Fund for Technology Development and Application

13. National Children’s Fund

14. Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory

15. The Army Central Welfare Fund or, the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996

16. The Maharashtra Chief Minister’s Relief Fund during October 1, 1993, and October 6, 1993

17. Chief Minister’s Earthquake Relief Fund, Maharashtra

18. Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of the earthquake in Gujarat

19. Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of the earthquake in Gujarat (contribution made between January 26, 2001, and September 30, 2001)

20. Prime Minister’s Armenia Earthquake Relief Fund

21. Africa (Public Contributions – India) Fund

22. Swachh Bharat Kosh (applicable from FY 2014-15)

23. Clean Ganga Fund (applicable from FY 2014-15)

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

List of donations eligible for 50% deduction without qualifying limit

1. Prime Minister’s Drought Relief Fund

List of donations eligible for 100% deduction subject to 10% of adjusted gross total income

• Donations to the government or any approved local authority, institution or association to be utilised to promote family planning

• Donation by a company to the Indian Olympic Association or any other notified association or institution established in India to develop infrastructure for sports and games in India or sponsor sports and games in India.

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

• Any other fund or institution satisfies the conditions mentioned in Section 80G(5).

• Government or any local authority, to be utilised for any charitable purpose other than promoting family planning.

• Any authority constituted in India to deal with and satisfy the need for housing accommodation or the purpose of planning, development or improvement of cities, towns, villages or both.

• Any corporation referred to in Section 10(26BB) for promoting the interest of the minority community.

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

What is adjusted Gross Total Income?

Adjusted Gross Total Income is calculated by reducing the following from the gross total income:

(a) Deductible amounts under Section 80C to 80U (excluding Section 80G)

(b) Share of profit in Association of Persons (AOP) eligible for rebate under Section 86

(c) Long-term capital gains

(d) Short-term capital gains arising from specified securities under Section 111A

(e) Any income specified in Sections 115A, 115AB, 115AC, 115ACA, 115AD, and 115D

Consider a scenario where your gross total annual income is Rs. 14 lakh. You've contributed Rs. 90,000 to NGOs, eligible for a 50% deduction with a qualifying limit of 10%. Additionally, you've availed deductions of Rs. 1.5 lakh under Section 80C and earned short-term capital gains of Rs. 2.5 lakh from the sale of equity shares.

To determine the maximum amount allowable under Section 80G, you first calculate your adjusted gross total income. This is your gross total income (GTI) reduced by deductions under Section 80C and short-term capital gains under Section 111A, resulting in (14 lakh - 1.5 lakh - 2.5 lakh) = Rs. 10 lakh.

Next, compute the qualifying limit for donations under Section 80G, which is 10% of your adjusted gross total income. In this case, the qualifying limit is Rs. 1,00,000.

The maximum allowable deduction under Section 80G is 50% of the lower amount between

 a) the donated sum (Rs. 90,000) and 

b) the qualifying limit (Rs. 1,00,000). 

In this instance, the lower amount is the qualifying limit of Rs. 90,000. Therefore, the maximum deduction allowable under Section 80G is 50% of Rs. 100,000, equaling Rs. 50,000.

Therefore, you can claim a deduction of Rs. 50,000 under Section 80G for the donations made to eligible NGOs.

To claim a tax deduction under Section 80G, individuals must have the following essential documents:

1. Duly Stamped Receipt:  It is imperative to obtain a receipt from the charity or trust to which the donation is made. The receipt should be duly stamped and include crucial details such as the donor's name, address, donated amount, PAN number of the trust, and other relevant information.

2. Form 58 becomes necessary when a donor intends to claim a 100% deduction. This form is required to validate and support the claim for such deductions.

3. Registration Number of Trust: Eligible trusts under Section 80G are assigned a registration number by the Income Tax Department. Donors must verify and ensure that the receipt they receive contains the trust's registration number, serving as a crucial validation for the donation.

Ensuring the availability and correctness of these documents is vital for substantiating the claim for tax deductions under Section 80G. Donors should maintain these records accurately to facilitate a smooth and legitimate deduction process during income tax filing.

What is the deduction under Section 80GGA?

Deduction in Respect of Certain Donations for Scientific Research or Rural Development

1. If a person carrying on business or profession makes a donation to the institution approved under section 35(1) (in) / 35(1) (il), then he shall be allowed a deduction of 100% under section 35(1) (i) / 35(1)(ii).

2. If a person not carrying on any business or profession makes a donation to the institution approved under section 35(1) (1) / 35(1)(i), then he shall be allowed a deduction of 100% of the donation made under section 80GGA.

No deduction shall be allowed under section 80GGA with respect to any donation of a sum exceeding Rs. 2,000 unless such sum is paid by any mode other than cash. Therefore, cash donations exceeding Rs. 2,000 are not eligible for deduction under section 80GGA.

The list of donations eligible under Section 80GGA includes:

• Any payment to a research association engaged in scientific research or to a college, university, or institution for approved scientific research under Section 35(1)(ii).

• Payments to a research association conducting research in social science or statistical research or to a college, university, or institution for the same purpose, approved under Section 35(1)(iii).

• Payments to an approved association or institution involved in rural development programs, approved under Section 35CCA.

• Payments to an approved association or institution conducting training for implementing rural development programs.

• Payments to a public sector company, local authority, or an approved association or institution carrying out projects or schemes approved under Section 35AC.

• Payments to a notified Rural Development Fund.

• Payments to a notified Fund for Afforestation.

• Payments to a notified National Poverty Eradication Fund.

FAQ

Q1. What is Section 80G of the Income Tax Act? 

Section 80G provides deductions for donations made to specified charitable organisations, offering taxpayers relief on the donated amount.

Q2. Are all donations eligible for deductions under Section 80G? 

No, only donations made to prescribed funds and institutions qualify for deductions under Section 80G.

Q3. What mode of payment is allowed under Section 80G? 

Donations can be made through cheque, demand draft, or cash (for amounts below Rs 2,000).

Q4. How do I claim a deduction under Section 80G? 

Report the donation details, including the name of the donee, PAN of the donee, and amount contributed, in the relevant section of your income tax return.

Q5. What are the tables for Section 80G deductions in the ITR form? 

Tables A, B, C, and D are provided in the ITR form for donations entitled to 100%, 50%, 100% subject to limit, and 50% subject to limit deductions, respectively.

 Q6. What is Section 80GGA? 

Section 80GGA allows deductions for donations made to entities involved in scientific research or rural development.

Q7. What types of donations qualify for deductions under Section 80GGA? 

Donations to entities engaged in scientific research, social science or statistical research, rural development, and other approved projects qualify.

Q8. Is there a qualifying limit for deductions under Section 80GGA? 

 No, Section 80GGA does not impose a qualifying limit; the entire amount donated is eligible for deduction.

 Q9. Can I make an in-kind donation and still claim deductions under Section 80G? 

 No, in-kind contributions such as food, clothes, etc., do not qualify. Only monetary donations made through prescribed modes are eligible.

 Q10. Is there a limit on cash donations for Section 80G eligibility? 

 Yes, cash donations above Rs 2,000 are not eligible for deductions under Section 80G.

 Q11. Can I make an online bank transfer for Section 80G donations? 

Yes, online bank transfers are considered prescribed modes of payment for Section 80G donations.

Q12. How can I verify the registration of a charitable trust under Section 80G? 

Check the receipt provided by the trust, which should include its registration number. Additionally, verify with the Income Tax Department.

Q13. Can donations made to all charitable trusts be claimed for deductions? 

No, only donations to trusts approved under Section 80G are eligible for deductions.

Q14. Is there any difference in claiming deductions for individual donors and companies? 

The process is similar, but companies may need to adhere to specific corporate tax guidelines.

Q15. Can I claim deductions for donations to international charities under Section 80G? 

 No, only donations to eligible Indian charitable organisations qualify for deductions under Section 80G.