Section 80GGA: Deductions on Donations for Rural Development

Income Tax Act provides several opportunities for taxpayers to claim partial or full deductions. Section 80GGA of Income Tax Act allows 100% deduction on donations made for the country’s scientific research and rural development. The main aim of this Section is to incentivise individuals to donate for noble causes, which can lead to further progress of the nation.

Eligible Donations for Deduction under Section 80GGA of the Income Tax Act

The following donations are eligible for deductions under Section 80GGA of the Income Tax Act:

Donations that one makes towards Rural Development Fund
Donations made to research institutions, associations, and universities that are carrying out any research activity (Note that the entities receiving donations must prescribe to rules specified in Section 35(1)(ii) of the IT Act.)
Donations made by individuals to institutions or associations which are carrying out research in social sciences or statistics
Donations received by institutions or associations that are involved in rural development programs (Section 80GGA will only be applicable if these institutions or associations adhere to conditions mentioned in Section 35CCA of the IT Act.)
Donations made towards Afforestation Fund
Donations that one makes to National Poverty Eradication Fund
Donations made by individuals to institutions or associations which provide training in the field of rural development to individuals or groups
Donations made to PSUs, research institutions, and bodies dealing with projects or schemes approved under Section 35AC of Income Tax Act

Who is Eligible to Claim Deductions under Section 80GGA of Income Tax Act?

Here is list of conditions under which one claims deductions under Section 80GGA of Income Tax Act:

Individuals claiming deductions must not have any income from business/profession.
Those having business income can claim similar deductions under Section 35 of the Income Tax Act.
Donations can be in cheque, cash or draft. However, no deduction will be available for cash donations above Rs. 10,000.

How to Claim Deduction under Section 80GGA of Income Tax Act?

Individuals can claim deductions by mentioning the following in their ITR:

Name of the donee
PAN of the donee
Permanent address of the entity receiving donations
Amount contributed by the individual

Once the Income Tax Department is fully convinced of the authenticity of donations, it will grant requisite deductions under Section 80GGA.

Section 80GGA Limit and Mode of Payment

Section 80GGA does not have any upper limit which restricts donations made to institutions or associations. All donations made under this Section are eligible for full deduction.

Individuals can make donations in cash, cheque or demand draft as per their convenience. However, cash donations above Rs. 10,000 are excluded from deduction claims. For example, let’s say Mr Jain has an annual taxable income of Rs. 6 lakh. He makes a donation of Rs. 1,00,000 under Section 80GGA. Now, if the total donation is through cheque or demand draft, a 100% deduction will be applicable. However, if the donation is made in cash, then only Rs. 10,000 will be available for deduction.

Also Read: Section 80GG – Eligibility & Steps To Claim Deduction For Rent Paid Under Section 80GG

Section 80GGA and Section 35AC of Income Tax Act

Section 35AC and Section 80GGA have a similarity between them. These sections allow 100% deductions on donations to specific institutions and organisations. However, 80GGA is only applicable for individuals who do not earn any income from business and profession. On the other hand, individuals having income from business or any profession must claim deductions under Section 35AC.

A crucial difference between these sections is in its carry forward system. One claiming deductions under Section 35AC can carry forward the same to next year in the form of losses. However, one cannot carry forward the deductions claimed under Section 80GGA in the form of losses.

Also Read: Tax Deduction Under Section 80EEA: Amount of Deduction, Eligibility & How To Claim

Things to Remember

Here is the list of things that one must keep in mind to claim deductions:

Form 58A
Donors must have Form 58A with them. This form will allow them to get deductions in lieu of their donations.

Double Deductions
Section 80GGA of the Income Tax Act does not allow more than one deduction in every assessment year. When an individual claims deduction under Section 80GGA for any particular donation made, he/she is not eligible for further deductions under the same Section.

Approval Withdrawal
Individuals planning to claim deduction under the said Section must check whether the institution or association receiving donations has registered with the government. They must also check whether institutions are complying with rules and regulations under the relevant Section and have their approvals intact.

The Income Tax Department can disallow deductions on any donation given to non-registered entities.

Final Word

The main aim of Section 80GGA was to increase philanthropic activities in the country. This Section has helped many NGOs and research institutions carry on their activities. However, individuals wanting to take benefit of this Section must conduct a thorough check on that institution to verify its authenticity before giving donations.

FAQs on Section 80GGA of Income Tax Act

Q1. Can one claim deduction under Section 80GG and HRA at the same time?

Ans. No, individuals cannot claim deduction under Section 80GG and HRA simultaneously. Section 80GG of the IT Act is applicable to individuals who do not receive HRA as a part of their salary.

Q2. What is Section 80G of Income Tax Act?

Ans. Whenever taxpayers make a donation to some specific charity or fund, they are eligible to claim deductions on the donation amount. They can claim such deductions while filing their ITR. Some donations allow 100% deduction, whereas some donations allow 50% deduction.

Q3. Are donations made to PMNRF eligible for deductions under Section 80GGA of Income Tax Act?

Ans. All donations that one makes towards Prime Minister’s National Relief Fund and Chief Minister’s Relief Fund do not qualify for deductions under section 80GGA. Only donations for scientific research and rural development are eligible for donations.

Q4.What is a 35AC 12 certificate?

Ans. All NGOs and research institutions accepting donations are required to provide a certificate to their donor in Form 58A. This certificate will allow donors to claim tax deductions while filing their Income tax returns.

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