Section 80GGA: Donations for Scientific Research and Rural Development

Research and development in the fields of natural or applied science is very expensive. Any institution involved in such research largely runs on donations. Such donations serve as a big source of funds to motivate them to go further in their science initiative. What are the benefits to donors for donating funds for such research and development? Section 80GGA of the Income Tax Act, 1961 has the answer.

---

Table of content

Section 80GGA

What are the Donations Eligible under Section 80GGA?

Conditions for Claiming Deduction under Section 80GGA

Points to Remember to Claim Deduction under Section 80GGA

Documents Required to Claim Deduction under Section 80GGA

Difference between Section 80G and Section 80GGA

Difference between Section 35AC and Section 80GGA

Section 80GGA and New Tax Regime

Most Asked Questions

---

Under the Income Tax Act, 1961, Section 80GGA allows for the tax benefits in the form of 100% deductions of donations made by the assessees towards the scientific research and rural development, provided the donation is made in any mode other than cash. However, the deductions are subject to a satisfaction of certain conditions mentioned under the said section. Let’s understand Section 80GGA in detail!

Section 80GGA

Section 80GGA allows donations for contributions towards scientific research and rural development. All assessees can claim deduction under this section except those whose total includes an income chargeable under the head ‘profits and gains from business or profession’. To qualify for the deduction under Section 80GGA, the donation must be made to those entities that are approved by the prescribed authority for the purposes of scientific research or rural development. It is worth noting that a 100% deduction of the amount contributed can be claimed under Section 80GGA, provided the donation is made in any mode other than cash.

Key Points on Section 80GGA: 

• Eligibility for 100% Deduction: All donations made to eligible institutions working in scientific research or rural development are eligible for a 100% tax deduction. 

• Non-Cash Donations: The donations have to be made through non-cash modes, like bank transfers or cheques, in order to qualify for the deductions. 

• Specific Conditions: For claiming such deductions, some conditions will have to be satisfied so that the money is spent for the purpose it was donated for. 

Benefits of Donating Under Section 80GGA:

• Tax Savings: Substantial reduction in taxable income by claiming deductions under Section 80GGA.

• Promotion of Scientific Research: The contribution helps in furthering scientific research and rural development projects of social importance.

• Encouragement to Philanthropy: This provision encourages Titanium individuals and businesses to come forward for financial support to such institutions.

What are the Donations Eligible under Section 80GGA?

Section 80GGA of the Income Tax Act, 1961, provides for income tax deductions on donations made for specified activities in respect of scientific research and rural development. The principal kinds of donations eligible under this section therefore are:

1. Donations to Scientific Research Institutions:

• Contributions made to any institution or association engaged in scientific research.

• The institutes, accordingly, are supposed to be approved by the prescribed authority under Section 35(1)(ii) or Section 35(1)(iii) of the Income Tax Act.

The research should relate to natural or applied science.

1. Donations to Universities and Colleges:

• Donations to any university or college or other institution which is wholly engaged in scientific research.

• Such institutions must be notified and approved for the purpose of TDS as provided under Section 80GGA.

1. Donations to Rural Development Projects:

• Any sum contributed to any institution or association carrying on any rural development program.

• The aforementioned institution has to be approved by the National Committee for rendering their service or executing any scheme or project for rural development under Section 35CCA.

1. Donations to Research Associations:

• Contributions to research associations that are carrying on scientific research.

• These research associations must be approved under Section 35(1)(ii) or Section 35(1)(iii).

1. Donation to Association and Institutions for Social Science or Statistical Research:

• Contributions to association or institution exclusively carrying on research in social science or statistical research.

• Such institutions shall necessarily have to be approved by the prescribed authority under the Income Tax Act.

Conditions for Claiming Deduction under Section 80GGA

Following conditions should be satisfied for availing 100% deduction under Section 80GGA:

• If the amount of donation exceeds INR 10,000, it should be made in any mode other than cash.

• An assessee whose total income includes the income from ‘profits and gains from business and profession’, shall not be allowed to claim deduction under Section 80GGA.

• Once a deduction for the donation made to the relevant assessment year is allowed, no other deduction under the Income Tax Act, 1961 can be claimed in the same or any other assessment year.

• The donation made to an entity has been approved by the prescribed authority for the purpose of scientific research or rural development.

• Donations in kind are not eligible for deduction under this section.

Points to Remember to Claim Deduction under Section 80GGA

To claim the deduction under Section 80GGA, the assessee should remember the following points:

• Donation to an approved institution: It is essential to ensure that the donation is made to an approved institution. If the approval is withdrawn later, it will have no effect on the previously made donation. As a result, the institute must be an approved one while receiving the donation.

• Obtain Form 58A: The approved institutions receiving contributions or donations under Section 35AC must issue Form 58A to the donor. This certificate will facilitate the donor to claim a 100% deduction under Section 80GGA, provided the donation is made in any mode other than cash. As a result, obtaining Form 58A from the institute is the mandatory requirement for availing the deduction.

• Multiple deductions under Section 80GGA: An assessee cannot claim multiple deductions with respect to Section 80GGA, if claimed once in a particular assessment year.

Documents Required to Claim Deduction under Section 80GGA

Certain documentary evidence would be required to claim deduction under Section 80GGA. Following documents would be required to claim the deduction:

• Stamped receipts which includes the name of the institution to whom the donation was made, the name of the assessee, and the amount of donation. The registration number of the institution as issued by the Income Tax Department should be specified on the receipt.

• When donations are made online, banks issue tax receipts directly to the donee which can be used as a proof for claiming deduction under Section 80GGA.

Difference between Section 80G and Section 80GGA

The following are the differences between Section 80G and Section 80GGA:

Difference between Section 35AC and Section 80GGA

The following are the differences between Section 35AC and Section 80GGA:

Section 80GGA and New Tax Regime

Under the new tax regime, an assessee has to forgo many exemptions and deductions as it was available under the old tax regime. Many deductions of Section 80 become unavailable to the taxpayers opting for the new tax regime. Deduction of Section 80GGA is one such example of deductions not available under the new tax regime. Therefore, an assessee will not be able to claim deduction under Section 80GGA, if opts for the new tax regime.

FAQs

Q1. What are the deductions allowed under Section 80GGA?

Donations made to an approved institute engaged in conducting scientific research and rural development by an assessee are eligible for a 100% deduction under Section 80GGA, provided the donation is made in any mode other than cash.

Q2. Are all types of assessees eligible for claiming deduction under Section 80GGA?

Under Section 80GGA, all assessees can claim a deduction, with the exception of those whose total income includes income chargeable under the heading ‘profits and gains from business or profession.’

Q3. What is the quantum of deduction allowed under Section 80GGA?

A deduction of 100% can be claimed by the assessee making donations to institutions engaged in scientific research or rural development, provided the donation is made in any mode other than cash. However, if the donation is made in cash, a limit of INR 10,000 will become applicable.

Q4. What are the conditions for claiming deduction under Section 80GGA?

Following are the conditions to claim deduction under Section 80GGA:

• Donations should be made to institutions or funds approved by the government for conducting scientific research and rural development.

• The donation should be made in any form other than cash, if the donation is in excess of INR 10,000.

• The assessee should request the receipt in Form 58A from such institution or fund to whom the donation is made.

• The assessee must submit the income tax return on or before the due date.

Q5. Are donations made to foreign institutions eligible for deduction under Section 80GGA?

No. Donations made to foreign institutions are not eligible for tax benefits under Section 80GGA. The donations should be made to the Indian government-approved institution or fund for scientific research or rural development.

Q6. Can a donation made under Section 80GGA be claimed as a deduction under any other Section of the Income Tax Act?

No. A donation made under Section 80GGA cannot be claimed as a deduction under other provisions of the Income Tax Act, 1961. It can only be claimed once.

Q7. What is the relevance of Form 58A?

Form 58A is the certificate of expenditure to be obtained by the donee at the time of making the donation to the institution or fund towards the eligible projects or schemes notified under Section 35AC.

Q8. Is an assessee allowed to carry forward deduction under Section 80GGA in the form of loss, if he is unable to claim entirely in the current financial year?

No. An assessee cannot carry forward deduction under Section 80GGA in the form of loss to the next financial year, if is unable to claim the entire deduction in the current financial year.

Q9. Does the new tax regime allow for the deduction under Section 80GGA?

The new tax regime does not allow maximum deduction under Section 80 of the Income Tax Act, 1961. Section 80GGA is an example of one such donation that cannot be claimed under the new tax regime.

Q10. Can a taxpayer claim a deduction under Section 80GGA without first obtaining a receipt from the institution or fund to which the donation is made?

A taxpayer cannot claim a deduction under Section 80GGA unless they obtain a receipt from the institution or fund to which the donation is made. The receipt should mention the details of the institution or fund, the details of the donee, the amount of donation, and the purpose of donation.