Many of us at some point in our lives have contemplated giving to charity and doing our bit for society. It is a commendable thing to donate to a cause that you sincerely believe in, and make a difference. Given the nobility of this gesture, the government extends its full support towards charitable services. Section 80G of the Indian Income Tax Act allows you tax deduction on donations made to any charitable organization. In this article, we will discuss the following topics.
Contributions made to certain relief funds and charitable institutions can be claimed as a deduction under Section 80G of the Income Tax Act. All donations, however, are not eligible for deductions under section 80G. Only donations made to prescribed funds qualify as a deduction.This deduction can be claimed by any taxpayer - individuals, company, firm or any other person.
2. What is the mode of payment
This deduction can only be claimed when the contribution has been made via a cheque or a draft or in cash. But the deduction is not allowed for donations made in cash exceeding Rs 10,000. In-kind contributions such as food, material, clothes, medicines etc. do not qualify for deduction under section 80G.From Financial Year 2017-18 onwards: Any donations made in cash exceeding Rs 2,000 will not be allowed as deduction. The donations above Rs 2,000 should be made in any mode other than cash to qualify as a deduction under section 80G.Amount of Donation: The various donations specified in section 80G are eligible for a deduction of up to either 100% or 50% with or without restriction, as provided in section 80G.
3. How to claim the deduction
To be able to claim this deduction the following details have to be submitted in your Income Tax Return
Name of the Donee
PAN of the Donee
Address of the Donee
Amount of Contribution
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4. 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
Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
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
The Maharashtra Chief Minister’s Relief Fund during October 1, 1993 and October 6, 1993
Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of the earthquake in Gujarat
Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of the earthquake in Gujarat (contribution made during January 26, 2001, and September 30, 2001) or
Prime Minister’s Armenia Earthquake Relief Fund
Africa (Public Contributions – India) 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)
5. 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
6. 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 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 and games in India, or the sponsorship of sports and games in India.
7. Donations Eligible for 50% Deduction Subject to 10% of Adjusted Gross Total Income
Any other fund or any institution which satisfies 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
Any authority constituted in India for the purpose of dealing with and satisfying the need for housing accommodation or for 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.
8. Section 80GGA
Section 80GGA allows deductions for donations made towards scientific research or rural development. This deduction is allowed to all assessees except those who have an income (or loss) from a business and/or a profession.
Mode of payment: Donations can be made in the form of a cheque or by a draft or in cash; however cash donations in excess of Rs 10,000 are not allowed as deductions. 100% of the amount that is donated or contributed is considered eligible for deductions.
9. Donations Eligible Under Section 80GGA
Any sum paid to a research association which undertakes scientific research, or a sum paid to a college, university or any other institution to be used for scientific research that is all approved by the prescribed authority under section 35(1)(ii)
Sum paid to a research association which undertakes research in social science or statistical research, or sum paid to a college, university or any other institution to be used for the same purpose, and these must all be approved by the prescribed authority under section 35(1)(iii)
Sum paid to an approved association or institution which undertakes any program of rural development and is approved under section 35CCA
Sum paid to an approved association or institution which undertakes training of person(s) for implementing programs of rural development
Sum paid to a public sector company, local authority or an approved association or institution which carries out projects or schemes approved under section 35AC.
Sum paid to notified Rural Development Fund
Sum paid to notified Fund for Afforestation
Sum paid to notified National Poverty Eradication Fund
If a deduction has been allowed under section 80GGA, such expenses shall not be deductible under any other provision of the income tax act.
10. Adjusted Total Income
Adjusted total income: Adjusted gross total income is the gross total income (sum of income under all heads) reduced by the aggregate of the following:
Amount deductible under Sections 80CCC to 80U (but not Section 80G)
Exempt income
Long-term capital gains
Income referred to in Sections 115A, 115AB, 115AC, 115AD and 115D, relating to non-residents and foreign companies
Frequently Asked Questions
I made donations to a trust of Rs.5000 in cash and the donations to trust are qualified for a deduction under section 80G. Can I claim deduction when at the time of filing a return?
No, in case of 80G donations made in cash in excess of Rs.2000 wont qualify for deduction, so you cannot claim a deduction for the same.
Can a partnership firm claim deduction under section 80G ?
Yes, individuals, firm, company or any other person can claim deduction under section 80G.
I am non resident and made donations to Prime Minister's Relief fund, can I claim deduction under section 80G?
Yes, the benefit of claiming deduction under section 80G is allowed to both resident and non residents.
What is 80GG in income tax? What is rent paid under 80GG ?
80GG allows you to claim deduction for rent paid even if your salary does not include HRA component or by self employed individuals having income other than salary. The condition is that you should not own any residential accommodation in the place of residence to claim deduction under 80GG.
How to calculate 80GG? How to claim 80GG?
80GG deduction will be allowed as lowest of below mentioned :
Rs 5,000 per month
25% of the adjusted total Income (excluding long-term capital gains, short-term capital gains under section 111A and Income under Section 115A or 115D and deductions under 80C to 80U. Also, income is before making a deduction under section 80GG).
Actual rent less 10% of Income
Who can claim deduction in 80GG?
Deduction under 80GG is available for employees who do not get HRA as a component of salary because of jobs in the informal sector or to self employed persons. The person claiming this deduction should not own a house in the place of residence.
Can I claim both 80GG and HRA?
No, individuals paying rent but do not receive house rent allowance are allowed to claim deduction under section 80GG. Also , the individual , spouse or children should not own a house property in the place of employment for claiming this deduction.
