Section 80G Of Income Tax Act – Its Provisions, Contributions Eligible and How to Claim
Section 80G of Income Tax Act, 1961, allows an income tax deduction for donations made to charities and funds. Contributing funds for the welfare of society helps make a difference. Through Section 80G, the Government of India aims to encourage people to make charitable donations.
If you have made such a donation, you can be eligible for a tax deduction. Read on to know all about Section 80G – provisions, eligibility criteria, how to claim a tax deduction and more.
Provisions of Section 80G
As per this Section, people contributing money to charitable institutions and relief funds can claim 80G deduction. However, not every donation is considered for tax benefits. Only donations in prescribed funds are eligible for 80G deduction. Any taxpayer (firms, companies or individuals) can claim this benefit.
Also Read: How To Use Online Income Tax Calculator?
Payment Mode for Claiming Tax Deduction Under Section 80G
An individual can claim a tax deduction under Section 80G when the contributions are made through cash, draft or cheque. Tax benefits are not available for in-kind donations such as medicines, clothes, materials and food.
A cash donation above Rs. 2,000 does not qualify for an 80G deduction. To avail a tax reduction, donations exceeding Rs. 2,000 should be given in any form other than cash. The specified donations in Section 80G of the Income Tax Act qualify for a deduction of up to 50% or 100% with or without conditions.
How to Claim Deduction Under Section 80G?
To claim the tax benefit, individuals need to submit these details in their income tax returns:
- Donee’s name
- Donee’s PAN
- Address proof of the donee
- Contribution amount (breakup of donation in cash and other modes)
- Amount eligible for a reduction
Contributions Eligible for 100% Tax Deduction Under Section 80G
The donations which qualify for 100% tax deduction can be:
1. Without qualifying limit
- National Fund for Control of Drug Abuse
- Clean Ganga Fund
- National Sports Fund
- Swachh Bharat Kosh
- National Blood Transfusion Council or any State Blood Transfusion Council
- Africa (Public Contributions – India) Fund
- Prime Minister’s Armenia Earthquake Relief Fund
- Any exclusive fund provided by the Gujarat Government for contributing relief to the victims of Gujarat’s earthquake
- Chief Minister’s Earthquake Relief Fund (Maharashtra)
- The Maharashtra Chief Minister’s Relief Fund (October 6, 1993, and October 1, 1993)
- Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
- Fund for Technology Development and Application
- National Cultural Fund
- Lieutenant Governor’s Relief Fund or Chief Minister’s Relief Fund with respect to any Union Territory or State
- National Illness Assistance Fund
- A State Government’s Fund to provide medical relief to the poor
- Zila Saksharta Samiti in any district under the district’s collector
- National Trust for Welfare of Persons with Multiple Disabilities, Mental Retardation, Cerebral Palsy and Autism
- An approved educational institution/university of National eminence
- National Foundation for Communal Harmony
- Central Government’s National Defence Fund
- National Relief Fund of the Prime Minister
2. Subject to 10% of AGI (Adjusted Gross Income)
- Contribution by an entity to the Indian Olympic Association. Or any other prescribed institution or association for developing infrastructure for games and sports in the country, or the sponsorship of games and sports in India
- Contributions to the Government or any notified local authority, association or institution that promotes family planning
Also Read: Income Tax Slabs And Rates
Contributions Eligible for 50% Tax Deduction Under Section 80G
The donations that are eligible for a 50% tax deduction can be:
1. Without qualifying limit
- Rajiv Gandhi Foundation
- Indira Gandhi Memorial Trust
- Drought Relief Fund of the Prime Minister
- Jawaharlal Nehru Memorial Fund
2. Subject to 10% of AGI (Adjusted Gross Income)
- For renovation or repairs of any notified church, gurudwara, mosque, temple, or other places
- Any corporation mentioned in Section 10(26BB) to promote the minority community’s interest
- Any authority in India that satisfies the requirement for housing accommodation or that deals with improving, developing and planning villages, towns, cities or both.
- A local authority or Government that offers charitable services other than the promotion of family planning
- Any other institution or fund that satisfies the conditions specified in Section 80G(5)
Illustration of Tax Benefit Under Section 80G Of Income Tax Act
The tax 80G deduction is based on the tax slab of an individual. For example, Mrs Agarwal is an individual who donates Rs. 1.6 lakh to an NGO. Her total income for the year 2020-2021 is Rs. 7 lakhs. The taxation is shown in the table below:
| Particulars | Mrs Agarwal |
| Income in the financial year 2020-2021 | Rs. 7 lakhs |
| Contributions made to an NGO | Rs. 1.6 lakhs |
| Eligible amount for a tax deduction (50% of the contribution made) | Rs. 80,000 |
| Gross amount subject to a limit of 10% of the gross income | Rs. 50,000 |
| Taxable income after allowing deduction | Rs. 6.2 lakhs |
| Tax payable before donation | Rs. 52,500 |
| Tax payable after donation | Rs. 36,500 |
| Tax benefit under Section 80G | Rs. 16,000 |
Documents Required to Claim Tax Deduction under Section 80G
Here’s a list of documents required to claim tax deduction under section 80G:
- Receipt of the donation – Name of the Trust, Address, PAN Card, donation amount and name of the donor.
- Form 58 from the Trust.
- Photocopy of 80G certificate from the Trust.
- Registration number of the Trust.
What is Section 80GGA?
Section 80GGA ensures deductions for donations towards rural development or scientific research. This 80G deduction is applicable to all assesses other than those who have an earning or loss from a profession and/or a business.
Contributions can be made in the form of cash, draft or cheque. However, cash donations exceeding Rs. 2,000 are not eligible for tax benefits. 100% of the donation amount qualifies for deductions.
Contributions Eligible Under Section 80GGA
- Specified National Poverty Eradication Fund
- Prescribed Fund for Afforestation
- Specified Rural Development Fund
- Local authority or public sector company or an approved institution or association that carries out schemes or projects eligible under Section 35AC
- Approved institution or association which conducts training of person(s) to implement rural development programs
- Approved institution or association which conducts any rural development programme and is eligible under Section 35CCA
- Research association which conducts statistical research or social science research, or a university, college or any other institution utilised for a similar purpose− approved under Section 35(1)(iii)
Final Word
The Government of India extends its support for noble causes through Section 80G of the Income Tax Act. Both non-resident and resident individuals can claim the tax deductions under this provision. The deductible expenses under Section 80GGA cannot be eligible for other tax benefits.
FAQs
Ans: Adjusted gross total income refers to the sum of income minus the total of the following:
Income specified in Sections 115D, 115AD, 115AC, 115AB and 115A, relating to foreign companies and non-residents.
Long-term capital gains
Exempt income
Sum deductible as per Sections 80CCC to 80U (excluding Section 80G)
Ans: 80GG allows a tax deduction for rent payable even if a person’s salary excludes HRA or the person is self-employed having earnings other than salary. An individual can only claim this deduction if he/she does not own any accommodation in the residential place.
Ans: 80GG deduction is eligible as the lowest of the below:
10% of income subtracted from actual rent
25% of adjusted total income (This is the earning excluding income u/s 115D or 115A, short-term capital gains u/s 111A, long-term capital gains and after considering deductions as per 80C to 80U. Additionally, the earning is before making a Section 80GG deduction)
Rs. 5,000 per month
Ans: Section 80GG deductions are applicable for employees not getting HRA as a part of their salary. Employees of informal sectors or self-employed individuals generally do not receive HRA. A person claiming this tax benefit should not own an accommodation where he/she resides.
Ans: Only the individuals who pay rent but do not receive house rent allowances can claim tax reductions under Section 80GG. In addition, the individual, children or spouse should not own a property in the employment location to be eligible for this benefit.
Ans: Yes, you can claim tax deductions under Section 80G if you donate to the Prime Minister’s Relief Fund as it is applicable for non-resident Indians and residents.
Disclaimer
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
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