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Many of us have contemplated donating to charity and doing our bit for society. Given the nobility of this gesture, the government extends its full support towards charitable services and provides tax deductions on the donated amount. Section 80G of the Indian Income Tax Act allows a tax deduction for contributions to certain relief funds and charitable institutions. Thus, you can claim tax deductions in Section 80G apart from Section 80C and save maximum taxes.
Budget 2023 provided that donations made to the following funds will not be eligible for any deductions under 80G:
Donations which are eligible for 50% deduction without any qualifying limit:
The following taxpayer can claim a deduction under this section:
However, all donations are not eligible for deductions under Section 80G. Only donations made to prescribed funds qualify as a deduction.
Note: This deduction is not available if you are opt for the new tax regime.
Section 80G deductions can be claimed by taxpayers when they make donations through the following modes:
Note: In-kind contributions such as food, material, clothes, medicines etc., and donations of above Rs 2,000 in case they do not qualify for deduction under Section 80G. Donations above Rs 2,000 should be made in any mode other than cash to qualify under Section 80G.
The various donations specified in Section 80G are eligible for a deduction of up to 100% or 50% with or without restriction, as provided in Section 80G.
To be able to claim this deduction, the following details have to be submitted in your income tax return:
The above details need to be mentioned in the respective tables given in the ITR.
Note: Donations to the last three funds will not be eligible for deduction from FY 2023-24 onwards.
The tax benefit will depend on the tax rate applicable to the taxpayer.
For example, Mr S is an individual and M/s. P Pvt. Ltd., a company, gives Rs 1,60,000 to an NGO. The total income for the AY 2020-21 of both Mr S and M/s. P Pvt. Ltd. is Rs 7,00,000. The tax benefit would be as shown in the table:
M/S. P Pvt. Ltd.
|i) Income for the financial year 2020-21
|ii) Donation made to NGO
|iii) Qualifying amount for deduction (50% of the donation made)
|iv) Amount of deduction u/s 80G (gross qualifying amount subject to a maximum limit of 10% of the gross total income)
|v) Taxable income after deduction
|A. Tax payable after considering a donation
-Mr S tax calculated as per income tax slab rate
-M/s. P Pvt Ltd. tax calculated at 30%
|B. Tax payable before donation
|C. Tax Benefit from Section 80G deduction
Taxpayers who want to claim tax deduction under Section 80G must have the following documents to support their claim:
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.
Donations can be made through a cheque, a draft, or cash. However, cash donations over Rs 2,000 are not allowed as deductions. 100% of the amount donated or contributed is eligible for deductions.
If a deduction has been allowed under Section 80GGA, such expenses shall not be deductible under any other provision of the Income Tax Act.
80GG deduction will be allowed as lowest of below mentioned:
Adjusted gross total income is the gross total income (sum of income under all heads) reduced by the aggregate of the following:
No, 80G donations made over Rs 2,000 won’t qualify for a deduction, so you cannot claim a deduction for the same.
Yes. Individuals, firms and companies can claim deduction under Section 80G.
Yes, the benefit of claiming a deduction under Section 80G is allowed to both residents and non-residents.
80GG allows you to claim a deduction for rent paid even if your salary does not include the 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.
Deduction under Section 80GG is available for employees who do not get HRA as a component of salary. HRA is not received by employees generally doing jobs in the informal sector or by self-employed persons. The person claiming this deduction should not own a house where he resides.
No, individuals paying rent but not receiving house rent allowance are allowed to claim a 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.
No, deduction under section 80G is not allowed to persons opting for the new tax regime.
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