Section 80G - Donations Eligible Under Section 80G

Introduction

Section 80G of the Income Tax Act, 1961, provides for income tax deductions for donations made to certain eligible organizations. This section allows individuals and companies to claim a deduction of up to 100% of the donated amount, subject to certain conditions.

To claim a deduction under Section 80G, the donation must be made to an eligible organization. Eligible organizations include:

1. Government-approved trusts and institutions that are engaged in charitable activities, such as education, healthcare, and poverty alleviation.
2. Funds set up by the Central Government or a State Government for scientific research or rural development programs.
3. Universities and colleges recognized by the University Grants Commission (UGC) or any other statutory authority.
4. Libraries and museums that are recognized by the Central Government or a State Government.
5. National Sports Federations recognized by the Indian Olympic Association (IOA).

Mode of Payments for Donations under Section 80G

Donations made to eligible organizations under Section 80G of the Income Tax Act, 1961, can be made in any mode of payment, including cash, cheque, demand draft, or online transfer. However, if the donation is made in cash, the amount of the donation should not exceed Rs. 2,000 in a single transaction or Rs. 10,000 in aggregate during a financial year for each eligible organization.

For donations made through cheque or demand draft, the donor should obtain a receipt from the eligible organization. The receipt should contain the name and address of the donor, the date of donation, the amount of donation, and the registration number of the eligible organization under Section 12AA of the Income Tax Act.

For online transfers, the eligible organization should provide a confirmation email or SMS to the donor with details of the donation. The confirmation should contain the name and address of the donor, the date of donation, the amount of donation, and the registration number of the eligible organization under Section 12AA of the Income Tax Act.

How to Claim the Deduction?

To claim the income tax deduction under Section 80G for the donations made to eligible organizations, you need to follow these steps:

1. Ensure that the organization is eligible for deduction under Section 80G. You can check the list of eligible organizations on the website of the Income Tax Department.

2. Obtain a receipt or confirmation from the organization for each donation made. The receipt or confirmation should contain the name and address of the donor, the date of donation, the amount of donation, and the registration number of the organization under Section 12AA of the Income Tax Act.

3. While filing your income tax return, you need to declare your total income and deduct the amount of donations made under Section 80G from your gross total income. You can do this by filling in Form 10 (IT Return) and entering the details of your donations in Schedule VI (Computation of Income).

4. You can claim a maximum deduction of 50% of the donation amount for donations made in cash, and 100% for donations made by cheque, demand draft, or online transfer.

5. If you have made multiple donations during a financial year, you need to aggregate them while calculating the deduction under Section 80G.

6. You should retain all receipts or confirmations as proof of making eligible donations under Section 80G, as you may be asked to produce them during an income tax audit or assessment.

List of Donations that are eligible for 100% deduction without the qualifying limit Under Section 80G and 80GGA

Under Section 80GGA of the Income Tax Act, 1961, certain donations made to specific funds or organizations are eligible for a 100% deduction without any qualifying limit. Here is a list of such donations:

1. Donations made to the National Fund for Promotion of Sports: This fund is set up by the Government of India to promote sports and games in the country. Donations made to this fund are eligible for a 100% deduction under Section 80GGA.

2. Donations made to the National Cultural Fund: This fund is established by the Government of India to promote and preserve Indian culture and heritage. Donations made to this fund are eligible for a 100% deduction under Section 80GGA.

3. Donations made to the Prime Minister’s National Relief Fund: This fund is established by the Government of India to provide relief to the victims of natural disasters and other calamities. Donations made to this fund are eligible for a 100% deduction under Section 80GGA.

4. Donations made to the National Disaster Relief Fund: This fund is set up by the Government of India to provide relief during natural disasters and emergencies. Donations made to this fund are eligible for a 100% deduction under Section 80GGA.

5. Donations made to the National Defence Fund: This fund is established by the Government of India to provide financial assistance to ex-servicemen and their families, as well as for defence preparedness and modernization. Donations made to this fund are eligible for a 100% deduction under Section 80GGA.

6. Donations made to the Swachh Bharat Kosh: This fund is set up by the Government of India to promote cleanliness and sanitation in the country. Donations made to this fund are eligible for a 100% deduction under Section 80GGA.

7. Donations made to the National Fund for Technology Development and Promotion: This fund is established by the Government of India to promote and develop indigenous technology in various sectors. Donations made to this fund are eligible for a 100% deduction under Section 80GGA.

8. Donations made to the National Children’s Fund: This fund is set up by the Government of India to provide financial assistance for the welfare and education of children in need. Donations made to this fund are eligible for a 100% deduction under Section 80GGA.

List of Donations eligible for 100% deduction which are subject to 10% of adjusted gross total income

Under Section 80G of the Income Tax Act, 1961, certain donations made to eligible organizations are eligible for a 100% deduction, subject to a limit of 10% of the adjusted gross total income (AGTI). Here is a list of such donations:

1. Donations made to scientific research organizations: These organizations should be approved by the National Academy of Sciences, India or any other organization recognized by the Government of India for this purpose.

2. Donations made to rural development organizations: These organizations should be engaged in activities related to agriculture, rural housing, rural sanitation, rural education, rural health, and rural infrastructure.

3. Donations made to welfare organizations: These organizations should be engaged in activities related to social welfare, such as education, healthcare, and relief for natural disasters and calamities.

4. Donations made to cultural organizations: These organizations should be engaged in activities related to arts, culture, and heritage conservation.

5. Donations made to environmental organizations: These organizations should be engaged in activities related to environmental conservation and preservation.

6. Donations made to national defense organizations: These organizations should be engaged in activities related to defense preparedness and modernization.

7. Donations made to national sports development organizations: These organizations should be engaged in activities related to sports and games development at the national level.

8. Donations made to foreign charitable institutions: These institutions should be registered under Section 12A of the Income Tax Act and should have a valid FCRA (Foreign Contribution Regulation Act) certificate issued by the Government of India.

How do Deductions under Section 80G Benefit Different Types of Taxpayers?

Deductions under Section 80G of the Income Tax Act, 1961, benefit different types of taxpayers in the following ways:

1. Salaried Individuals: Salaried individuals can claim a deduction under Section 80G for donations made to eligible organizations. This deduction reduces their taxable income and, in turn, reduces their income tax liability.

2. Self-Employed Individuals: Self-employed individuals can also claim a deduction under Section 80G for donations made to eligible organizations. This deduction reduces their taxable income and, in turn, reduces their income tax liability.

3. Companies: Companies can claim a deduction under Section 80G for donations made to eligible organizations. This deduction reduces their profit before tax (PBT) and, in turn, reduces their corporate income tax liability.

4. Partnership Firms: Partnership firms cannot claim a deduction under Section 80G for donations made by the firm as a whole. However, individual partners can claim a deduction under Section 80G for donations made by them personally to eligible organizations.

5. HUFs: Hindu Undivided Families (HUFs) cannot claim a deduction under Section 80G for donations made by the HUF as a whole. However, individual members of the HUF can claim a deduction under Section 80G for donations made by them personally to eligible organizations.

Documents Required to Claim Deductions under Section 80G

To claim deductions under Section 80G of the Income Tax Act, 1961, you need to submit certain documents to the Income Tax Department while filing your income tax returns. Here is a list of documents required:

1. Receipt or acknowledgment from the eligible organization: You should obtain a receipt or acknowledgment from the eligible organization for the donation made. This receipt should contain the name and address of the organization, the date of donation, the amount donated, and a registration number issued by the relevant authority (such as FCRA for foreign organizations).

2. Proof of payment: You should have proof of payment for the donation made, such as a bank statement, cheque copy, or online transfer confirmation.

3. Form 57: If you are claiming a deduction for donations made to foreign organizations, you should submit Form 57 along with your income tax returns. Form 57 is a declaration form that provides details about the foreign organization and its activities.

4. Proof of eligibility: If you are claiming a deduction for donations made to organizations other than those listed in Section 80G(5), you should provide proof of eligibility from the relevant authority (such as the National Academy of Sciences, India or any other organization recognized by the Government of India).

5. Proof of identity: You should provide proof of identity, such as a PAN card or Aadhaar card, to claim deductions under Section 80G.

Process to Claim Deductions

Here’s a step-by-step process to claim deductions under Section 80G while filing your income tax returns:

1. Calculate the eligible amount: To claim a deduction under Section 80G, you need to calculate the eligible amount of donation made during the financial year. This amount should be mentioned in your income tax returns.

2. Fill out the relevant form: You need to fill out the relevant form (ITR-1, ITR-2, ITR-3, ITR-4, or ITR-5) based on your income and type of assessment.

3. Enter the eligible amount: In the relevant section of the form, enter the eligible amount of donation made during the financial year.

4. Attach documents: Attach all the required documents, such as receipts or acknowledgments, proof of payment, Form 57 (if applicable), proof of eligibility (if applicable), and proof of identity, to support your claim for deductions under Section 80G.

5. Submit your income tax returns: Once you have filled out the form and attached all the required documents, submit your income tax returns online or offline to the Income Tax Department.

6. Wait for processing: The Income Tax Department will process your income tax returns and verify your claims for deductions under Section 80G. If everything is in order, you will receive a refund (if applicable) or a reduced tax liability.

Section 80GGA

Section 80GGA of the Income Tax Act, 1961, provides deductions for donations made for 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. 100% of the amount donated or contributed is eligible for deductions, however, any cash donation above Rs 2,000 is not allowed for deduction under this section.

Some of the eligible donations under Section 80GGA are:

Donations to research institutions/associations/universities involved in scientific research.
Donations to institutions/associations/colleges which are involved in research related to social science or statistics.
Donations to associations/institutes which are involved in rural development programs or training.
Donations to associations/institutions/public sector companies or local authorities which are involved in projects or schemes approved under Section 35AC.
Donations to the Rural Development Fund, the Afforestation Fund, or the National Poverty Eradication Fund.

To claim the deduction under Section 80GGA, the taxpayer has to submit the proof of payment along with the details of the donee, such as name, address, PAN, and eligibility. The deduction can be claimed in the respective tables given in the ITR form.