Deduction under Section 80G and 80GGA of Income Tax Act

Government has notified several charitable funds or societies, where you can donate your funds. Section 80G and Section 80GGA of Income Tax Act provides deduction in respect of such donations.

There are many trusts who are engaged in charitable activities but you should be aware of the fact that deduction of donation is available only in respect towards the trusts which are government notified.


    Eligibility of deduction under section 80G

    • As per section 80G of Income Tax Act 1961, every assesse whether he is an individual, company, firm or any other person, is eligible to avail deduction.
    • If the donation amount exceeds Rs.2000, then payment should be made by any mode other than cash.
    • If you made a donation in kind like clothes, food etc. then the same is not eligible for taking deduction under section 80g.
    • Deduction is available only for the donation made to government notified institutions.

     

    Amount of Deduction allow under Section 80G

    (A) Deduction available for 50% (Without qualifying limit)

    Following are the institutions where you can donate and can take deduction for 50% of amount donated:

    • Rajiv Gandhi Foundation
    • Jawaharlal Nehru Memorial Fund
    • Prime Minister’s Drought Relief Fund
    • Indira Gandhi Memorial Trust

     

    (B) Deduction available for 100% (Without qualifying limit)

    Following are the institutions where you can donate and avail deduction for 100% of amount donated:

    • National Defense Fund by the Central Government
    • Prime Minister National Relief Fund
    • National Foundation for Communal Harmony
    • An approved Uni. / educational institution of National eminence
    • Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector
    • Fund set up by State Government for medical relief to the poor
    • National Illness Assistance Fund
    • National Blood Transfusion Council or State Blood Transfusion Council
    • National Trust for Welfare for 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 / Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
    • The Army Central Welfare Fund /  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 01-10-1993 and 06-10-1993
    • Chief Minister’s Earthquake Relief Fund, Maharashtra State
    • Any fund set up by the State Government of Gujarat for providing relief to the victims of the earthquake in Gujarat
    • Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of the earthquake in Gujarat (contribution made during 26-01-2001 and 30-09-2001) or
    • Prime Minister’s Armenia Earthquake Relief Fund
    • Africa (Public Contributions, India) Fund
    • Swachh Bharat Kosh (start from FY 2014-15)
    • Clean Ganga Fund (start from FY 2014-15)
    • National Fund for Control of Drug Abuse (start from FY 2015-16)

    (C) Deduction available for 100% (With qualifying limit)

    Following donations are eligible for 100% deduction but subject to qualifying limit:

    • Donation to government, local authority, institution or associations, which is utilized for the purposes of promoting family planning.
    • Donation by company to Indian Olympic Association or other notified institution for development of infrastructure for sports.

     

    (D) Deduction available for 50% (With qualifying limit)

    Following are the donation eligible for 50% deduction but subject to qualifying limit:

    • Donation to notified temples, mosque, gurudwara, church or any other religions places for renovation or repair.
    • Donation to government, local authority, institution or association, for any charitable purpose other than family planning.
    • To any corporation established by government for promoting the interest of minority community
    • Donation to any authority constituted in India for the purpose of housing accommodation or for planning, development or improvement of city, town, village.
    • To any fund notified under section 80G

     

    So we have seen deduction of donation is four categories (A), (B), (C), (D). Out of these (A) and (B) can avail deduction 50% and 100% of the amount donated.

    Eg. If you donate in category (A) Rs.10000 then you can avail deduction of Rs. 5000 (i.e. 50% of amount donated).

    But in Category (C ) and (D) while calculating the deduction you should be taken into account the concept of qualifying limit.


    What is Qualifying Limit under section 80G of Income Tax Act?

    Qualifying limit is lower of the following two amounts:

    • 10% of adjusted gross total income or
    • Actual donation made

    For Calculating adjusted gross total income:

    Particulars

    Amount (Rs)

    Gross Total Income

    (-) Long term capital gain

    (-) Short term capital gain u/s 111A

    (-) Deduction u/s 80C-80U (except section 80G)

    (-) Exempt Income

    (-) Income under section 115A, 115AB, 115AC, 115AD and 115D( Non-residents and foreign companies)

    -------

    -------

    -------

    -------

    -------

    -------

    Adjusted gross Total Income

    -------

     

    Example: How to Calculate donation under section 80G?

    Mr. A has the following particulars:

    • Income under the head salary Rs.210000
    • Income under the head house property Rs.170000
    • Long term capital gains Rs.65000
    • Short term capital gain u/s 111A Rs.42000

    He has invested Rs. 40000 in NSC and Donation under section 80G as

    • Rajiv Gandhi Foundation Rs.10000
    • Temple notified Rs.20000
    • Charitable Intuition Rs.30000

     

    Solution:

    Particulars

    Detail

    Amount Rs.

    Income under the head salary

    Income under the head house property

    Income under the head capital gain

    (-) LTCG 

    (-) STCG u/s 111A

     

     

     

    65000

    42000

    210000

    170000

     

     

    107000

    Gross Total Income

    (-) Deduction

    80C-Investment in NSC

    80G

    (-) Rajiv Gandhi Foundation (10000*50%)

    (-) 50% Subject to qualifying limit (Note.1)

     

     

    40000

     

    5000

    17000

    487000

     

     

     

     

    62000

     

     

    425000

     

    Note:

    Least of the following in qualifying limit:

    • 10% of adjusted gross total income: Rs. 340000 * 10% = Rs.34000
    • Actual Donation made: Rs.20000 + Rs. 30000 = Rs. 50000

    Hence qualifying limit is Rs.34000

    And 50% subject to qualifying limit is Rs. 34000 * 50%= Rs.17000

     

    Calculation of Adjusted Gross Total Income

    Particulars

    Amount (Rs)

    Gross Total Income

    (-) Long term capital gain

    (-) Short term capital gain u/s 111A

    (-) Deduction u/s 80C-80U (except section 80G)

    487000

    (65000)

    (42000)

    (40000)

    Adjusted gross Total Income        

    340000

     

    Donation under section 80GGA

    • Section 80GGA provides deduction for donations made towards scientific research or rural development.
    • Every assessee can claim deduction under this section except those who have income under the head business and / or profession.
    • Donation in excess of Rs.10000 should be made through any mode other than cash.
    • 100% of the amount donated is eligible for deduction.

     

    Conclusions

    Under Section 80G of Income Tax Act, Government has notified various charitable funds or societies into four parts, where you can donate your funds. And under section 80GGA you can also donate towards scientific research or rural development.

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