Section 80G of Income Tax Act

What is Section 80G?

The Income Tax Act allows deduction while calculating the total taxable income to every assessee. One such deduction is allowed under section 80G of Income Tax Act, 1961 for donations made to a charitable organization or a trust. Along with these deduction is also available for donation to a political party, research organization or an electoral trust.

Tax Exemption Under Section 80G of Income Tax Act

Any donation made to a relief fund or charitable institution qualify for a deduction. This deduction is available while calculating the total taxable income. However, the following conditions apply for deductions on donations:

1. Not every donation qualifies for a 100% deduction. Every assessee must refer to the eligibility of the organization while claiming a deduction
2. Any assessee can claim deduction i.e. individual taxpayer, Indian companies, partnership firm, and so on
3. A donation made in cash in excess of Rs 2,000 is not eligible for deduction
4. Any donation made in kind like clothes, food, medicines, etc do not qualify as a deduction or tax benefit
5. The donation varies as per the eligibility criteria. The deduction can be 100% or 50% with or without restriction as per the provisions of section 80G

What is the Qualifying Amount u/s 80G for Donations?

As per the provisions of section 80G, not every donation qualifies for a 100% deduction. It depends on the eligibility of the organization to which donation is made. The organization’s eligibility is the deciding factor for a tax benefit. Further the deduction could be 100% or 50% with or without restrictions.

The qualifying amount is the amount that is allowed as a deduction against the donation. Every assessee must calculate the qualifying amount carefully to avoid any misrepresentation in the income tax return.

How to Calculate the Gross Adjusted Total Income?

Refer to the following table to calculate the gross adjusted total income:

Particulars	Amount (Rs)
Gross total income	XXXX
(-) Deductions u/s 80C to 80U (except section 80G)	XXXX
(-) Exempt income	XXXX
(-) Short term capital gains on the sale of shares u/s 111A	XXXX
(-) Long term capital gains	XXXX
(-) Income covered to in sections 115A, 115AB, 115AC, 115AD and 115D	XXXX
Gross Adjusted total income	XXXX

Calculation of Deduction under Section 80G of Income Tax Act

The calculation of eligible deduction against the donation depends on the below-mentioned factors:

1. Qualifying amount for deduction
2. Eligibility of donation. Example-  100% Deduction Subject to 10% of Adjusted Gross Total Income or Donations Eligible for 100% Deduction Without Qualifying Limit and so on.

In this illustration let us calculate the amount of deduction against a donation under section 80G of Income Tax Act. Moreover the donation is eligible for a 50% Deduction Subject to 10% of Adjusted Gross Total Income.

Mr. Arun makes a donation to a corporation referred to in Section 10(26BB) for promoting the interest of the minority community. He makes a donation of Rs 1,00,000. 

The following are a few other details:

1. Basic salary- Rs 800,000
2. Deduction under section 80C– Rs 150,000
3. Long Term Capital Gains- Rs 30,000
4. Short term capital gains on the sale of shares u/s 111A- Rs 20,000

Step-1 Find the adjusted total income

Particulars	Amount (Rs)
Gross total income	800000
(-) Deductions u/s 80C to 80U (except section 80G)	150000
(-) Short term capital gains on the sale of shares u/s 111A	20000
(-) Long term capital gains	30000
Adjusted total income	600,000

Step- 2 Find the qualifying amount

The qualifying amount under this category of the donation will the least of the following:

1. The actual amount of donation
2. 10% of Adjusted Gross Total Income.

Particulars	Amount
The actual amount of donation	1,00,000
Adjusted Gross Total Income	6,00,000
10% of Gross Total Income	60000

Step-3 Calculate the actual deduction

Since the donation is made to a corporation referred to in Section 10(26BB), the eligible deduction will be 50% of the qualifying amount.

Eligible amount of deduction = 50% of qualifying amount

                                           = 50% of 60,000

                                               = Rs 30,000

How to Claim Deduction Under Section 80G?

To claim a deduction under section 80G every assessee must fill the below details in the income tax return:

1. The amount of donation
2. Name and address of the donee
3. PAN of the donee

It is not required to submit the receipt of the donation. However, it is advisable to always save the donation receipt mentioning the amount of donation and PAN of the donee.

Explore Section 43B

Donations Eligible for 100% Deduction u/s 80G Without Qualifying Limit

Following are donations eligible for 100% deduction u/s 80G 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
• The 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. 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
• Chief Minister’s Earthquake Relief Fund, Maharashtra
• 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 Sec 80G(5C) applies. They provide relief to the victims of the earthquake in Gujarat. The contribution made during January 26, 2001, and September 30, 2001
• 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)

Donations Eligible for 50% Deduction Without Qualifying Limit

Following are 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

Donations Eligible for 100% Deduction Subject to 10% of Adjusted Gross Total Income

Following are donations eligible for 100% deduction subject to 10% of adjusted gross total income:

• 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. The purpose is for the development of infrastructure for sports and games in India, or the sponsorship of sports and games in India.

Donations Eligible for 50% Deduction Subject to 10% of Adjusted Gross Total Income

Following are 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 Sec 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. Additionally, 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.

Tax Exemption u/s 80GGA of Income Tax Act, 1961

The Section 80GGA of Income Tax Act provides for deduction while calculating the total taxable income against donations made in the financial year. The following are a few conditions for deductions on donations:

1. The donation must be made to an association or an organization whose main objective or purpose is scientific research or rural development. 
2. The association or organization must be approved by the income tax department for this purpose.
3. In order to claim the deduction, the specific association or organization must remain approved while making the donation.
4. Where an assessee claims a deduction under section 80GGA, he/ she cannot claim this deduction under any other provisions of the Income Tax Act, 1961.
5. Any assessee can claim deduction except the assessee who has an income (or loss) from a business and/or a profession
6. A cash donation exceeding Rs 2000 in a financial year will be disallowed as a deduction
7. Moreover, 100% of the donation is eligible for deduction 

Donations Qualify for Deduction u/s 80GGA

The following are donations that qualify for deduction u/s 80GGA:

• Any sum paid to a research association that undertakes scientific research, or a sum paid to a college, university or any other institution. The donation to be used for scientific research that is all approved by the prescribed authority under section 35(1)(ii).
• A research association that undertakes research in social science or statistical research, or sum paid to a college, university or any other institution. The donation 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
• 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
• Notified National Poverty Eradication Fund

Tax Benefit u/s 80GGB of Income Tax Act, 1961

While computing the total taxable income, an assessee being an Indian Company can claim deduction under section 80GGB. The deduction can be claimed against a donation made to any political party or an electoral trust in the previous year. However, the Indian company cannot claim any deduction if the mode of payment is cash.

explore our article on 80P Deduction

Tax Benefit u/s 80GGC of Income Tax Act, 1961

While computing the total taxable income, an assessee can claim deduction under section 80GGC. One can claim the deduction against a donation to political party or an electoral trust in the previous year. The assessee cannot claim any deduction if the mode of payment is cash. However, the assessee must not be any local authority and every artificial juridical person wholly or partly funded by the Government.

For the purposes of sections 80GGB and 80GGC, “political party” means a political party registered under section 29A of the Representation of the People Act, 1951

Key difference between Section 80G, Section 80GGA, Section 80GGB and Section 80GGC

A very common mistake made by many taxpayers is that they club all the donations under section 80G of Income Tax Act, 1961. While efiling income tax returns they add all the donations and show under section 80G. 

By doing they actually make a mistake in calculating the total amount eligible for deduction and representing the correct information. Moreover, all the three sections deal with different types of deductions on donations. However, the similarity between all these three sections is that they all provide tax benefit to the assessee.

Features	Section 80G	Section 80GGA	Section 80GGB	Section 80GGC
Donations qualify for deduction	charitable organisations and trusts	organization with purpose of scientific research or rural development	any political party or an electoral trust	any political party or an electoral trust
Doner	Any assessee	Any assessee	Indian Companies	Assessee other than any Indian Companies
Amount of Deduction	Depends on the type of organisation and the qualifying amount	100% of the donation is eligible	100% of the donation is eligible	100% of the donation is eligible
Cash Donation	Limited to Rs 2,000	Limited to Rs 2,000	Not Allowed	Not Allowed

Recommended Read: Section 80GG

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