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.
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?
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.
To claim the tax benefit, individuals need to submit these details in their income tax returns:
The donations which qualify for 100% tax deduction can be:
Also Read: Income Tax Slabs And Rates
The donations that are eligible for a 50% tax deduction can be:
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:
|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)
|Gross amount subject to a limit of 10% of the gross income
|Taxable income after allowing deduction
|Rs. 6.2 lakhs
|Tax payable before donation
|Tax payable after donation
|Tax benefit under Section 80G
Here’s a list of documents required to claim tax deduction under section 80G:
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.
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.
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
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.
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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