Filing for AY 2024-25 is coming soon
Keep calm and sign up for early access to our super filing platform

Section 80G - Donations Eligible Under Section 80G and 80GGA - 80G Exemption List

In a world where many of us strive to make a positive impact on society, donating to charitable organizations is a noble gesture. Not only does it help those in need, but it also comes with the added benefit of tax deductions. The Indian Income Tax Act, under Section 80G, allows individuals, companies, firms, Hindu Undivided Firms (HUF), non-resident Indians (NRI), and other entities to claim tax deductions for contributions made to certain relief funds and charitable institutions.

Eligibility for Deduction Under Section 80G

While this deduction is available to a wide range of taxpayers, it's important to note that not all donations are eligible for deductions under Section 80G. Only donations made to prescribed funds qualify for deductions. Additionally, it's worth mentioning that this deduction is not available for those who opt for the new tax regime.

Modes of Payment for Section 80G Deductions

When making donations for the purpose of claiming deductions under Section 80G, taxpayers can choose from several modes of payment. These include cheque, demand draft, and cash (for donations below Rs 2,000). However, it's important to note that in-kind contributions and donations above Rs 2,000 made in cash do not qualify for deductions under Section 80G. Donations above Rs 2,000 should be made through any mode other than cash to be eligible for this deduction.

Read more:- Section 80TTB Deduction for Senior Citizens: A Comprehensive Guide

Claiming Deductions Under Section 80G

To claim a deduction under Section 80G, taxpayers need to provide specific details in their income tax return. These details include the name, PAN, and address of the donee, the amount of contribution, and the breakup of contribution in cash and other modes of payment. These details need to be mentioned in the respective tables provided in the income tax return. The tables are categorized based on the type of donations and the percentage of deduction they qualify for.

Donations Eligible for Deduction Under Section 80G

Section 80G provides different categories of donations that are eligible for deductions. These donations are further classified into two types: those eligible for 100% deduction without a qualifying limit, and those eligible for 50% deduction without a qualifying limit. Let's take a closer look at some of the donations that fall under these categories:

Donations Eligible for 100% Deduction Without Qualifying Limit

  • National Defense Fund set up by the Central Government
  • Prime Minister's National Relief Fund
  • National Foundation for Communal Harmony
  • Approved university/educational institution of national eminence
  • Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
  • Fund set up by a state government for medical relief to the poor
  • National Illness Assistance Fund
  • National Blood Transfusion Council or any State Blood Transfusion Council
  • National Trust for Welfare of 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 or Lieutenant Governor's Relief Fund with respect to any State or Union Territory
  • The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund
  • Andhra Pradesh Chief Minister's Cyclone Relief Fund, 1996
  • The Maharashtra Chief Minister's Relief Fund during October 1, 1993, and October 6, 1993
  • Chief Minister's Earthquake Relief Fund, Maharashtra
  • Any fund set up by the State Government of Gujarat exclusively 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 between January 26, 2001, and September 30, 2001)
  • Prime Minister's Armenia Earthquake Relief Fund
  • Africa (Public Contributions - India) Fund
  • Swachh Bharat Kosh (applicable from FY 2014-15)
  • Clean Ganga Fund (applicable from FY 2014-15)
  • National Fund for Control of Drug Abuse (applicable from FY 2015-16)

Donations Eligible for 50% Deduction Without Qualifying Limit

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

It's important to note that donations made to the last three funds mentioned above will not be eligible for deductions from FY 2023-24 onwards.

Read more:- Section 80GGC of the Income Tax Act

Tax Benefits for Different Types of Taxpayers

The tax benefit derived from claiming a deduction under Section 80G varies depending on the tax rate applicable to the taxpayer. Let's consider a scenario where an individual, Mr. S, and a company, M/s. P Pvt. Ltd., both donate Rs 1,60,000 to an NGO. If their total income for the AY 2020-21 is Rs 7,00,000, the tax benefits would be as shown in the table below:

Particulars

Mr. S

M/s. P Pvt. Ltd.

Income for the financial year 2020-21

Rs 7,00,000

Rs 7,00,000

Donation made to NGO

Rs 1,60,000

Rs 1,60,000

Qualifying amount for deduction (50% of the donation made)

Rs 80,000

Rs 80,000

Amount of deduction u/s 80G (gross qualifying amount subject to a maximum limit of 10% of the gross total income)

Rs 50,000

Rs 50,000

Taxable income after deduction

Rs 6,20,000

Rs 6,20,000

Tax payable after considering a donation (Mr. S tax calculated as per income tax slab rate, M/s. P Pvt Ltd. tax calculated at 30%)

Rs 36,500

Rs 1,86,000

Tax payable before donation

Rs 52,500

Rs 2,10,000

Tax Benefit from Section 80G deduction

Rs 16,000

Rs 24,000

As demonstrated in the table, Mr. S and M/s. P Pvt. Ltd. can enjoy significant tax benefits by utilizing the deduction under Section 80G.

Section 80GGA: Deductions for Scientific Research and Rural Development

Apart from Section 80G, taxpayers can also avail deductions under Section 80GGA. This section allows deductions for donations made towards scientific research or rural development. However, individuals with income (or loss) from a business and/or a profession are ineligible for this deduction.

Mode of Payment for Claiming Deduction Under Section 80GGA

Similar to Section 80G, donations under Section 80GGA can be made through cheque, demand draft, or cash. However, cash donations exceeding Rs 2,000 are not eligible for deductions.

Donations Eligible Under Section 80GGA

Section 80GGA provides specific donations that qualify for deductions. These include sums paid to research associations undertaking scientific research or social science research, approved universities, and institutions involved in rural development programs. Let's take a closer look at the donations eligible under Section 80GGA:

  • Sum paid to a research association undertaking scientific research or a college, university, or institution for scientific research approved by the prescribed authority under Section 35(1)(ii)
  • Sum paid to a research association undertaking social science or statistical research, or a college, university, or institution for the same purpose, approved by the prescribed authority under Section 35(1)(iii)
  • Sum paid to an approved association or institution undertaking any program of rural development and approved under Section 35CCA
  • Sum paid to an approved association or institution providing training for the implementation of rural development programs
  • Sum paid to a public sector company, local authority, or approved association or institution carrying out projects or schemes approved under Section 35AC
  • Sum paid to notified Rural Development Fund
  • Sum paid to notified Fund for Afforestation
  • Sum paid to the notified National Poverty Eradication Fund

It's important to note that if a deduction has been allowed under Section 80GGA, such expenses shall not be deductible under any other provision of the Income Tax Act.

Calculating and Claiming Deductions Under Section 80GG

Section 80GG allows individuals to claim deductions for rent paid, even if their salary does not include the House Rent Allowance (HRA) component or if they are self-employed individuals with income other than salary. To calculate the deduction under Section 80GG, certain factors need to be considered.

Calculation of 80GG Deduction

The deduction under Section 80GG is allowed as the lowest of the following three amounts:

  1. Rs 5,000 per month
  2. 25% of the adjusted total income
  3. Actual rent minus 10% of the adjusted total income

Claiming 80GG Deduction

To claim the deduction under Section 80GG, taxpayers should ensure that their adjusted total income is calculated correctly. The adjusted total income is the gross total income reduced by the aggregate of the following:

  • Amount deductible under Sections 80C to 80U (except Section 80G)
  • Exempt income
  • Long-term capital gains
  • Short-term capital gains under Section 111A
  • Income referred to in Sections 115A, 115AB, 115AC, 115AD, and 115DF

By considering these factors and calculating the deduction accurately, taxpayers can maximize their tax savings under Section 80GG.

Conclusion

Making charitable donations not only helps those in need but also provides opportunities for taxpayers to claim tax deductions. Section 80G of the Indian Income Tax Act allows deductions for contributions made to specific relief funds and charitable institutions. By understanding the eligibility criteria, modes of payment, and the different categories of eligible donations, taxpayers can make informed decisions to maximize their tax savings. Additionally, Section 80GGA offers deductions for donations made towards scientific research or rural development, providing further opportunities for taxpayers to contribute to important causes while enjoying tax benefits. As taxpayers navigate the complexities of tax regulations, it's crucial to consult with tax professionals or use reliable tax software to ensure accurate calculations and adherence to all applicable rules and regulations. By leveraging the provisions of Section 80G and Section 80GGA, taxpayers can contribute to the betterment of society while optimizing their tax liabilities.

author

The Tax Heaven

Mr.Vishwas Agarwal✍📊, a seasoned Chartered Accountant 📈💼 and the co-founder & CEO of THE TAX HEAVEN, brings 10 years of expertise in financial management and taxation. Specializing in ITR filing 📑🗃, GST returns 📈💼, and income tax advisory. He offers astute financial guidance and compliance solutions to individuals and businesses alike. Their passion for simplifying complex financial concepts into actionable insights empowers readers with valuable knowledge for informed decision-making. Through insightful blog content, he aims to demystify financial complexities, offering practical advice and tips to navigate the intricate world of finance and taxation.

Frequently Asked Questions

Donation given to charity comes under Section 80G and Section 80GGA of the Income Tax Act. The Act also grants exemptions on various financial transactions and various proofs have to be submitted to claim the exemptions.

Salaried and self-employed individuals can claim deduction under Section 80GG. This provision is also available to tax-compliant businesses. If a person is living at his/her parents' residential property, they can claim the benefit of Section 80GG.

Donations in the form of cash are eligible for deduction if they are less than Rs 2,000; Otherwise, it is not possible. Note: Donations exceeding Rs 2,000 as well as contributions such as food items, materials, clothing and medicine etc. should not be made through cash to qualify for deduction under Section 80G.

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 a full deduction. Individuals can make donations in cash, cheque or demand draft as per their convenience.

If a cash donation exceeds Rs 2000 in one financial year, it cannot be deducted. Additionally, the whole of the donation is deductible by 100%.
 

It is vital to have two documents available at all times to claim a deduction under section 80G: the donated receipt and form 10BE. Have it handy during ITR filing as it will require you to provide information contained in both; the donation receipt and the donation certificate.
 

You can claim 100% or 50% of the amount donated as deduction with or without the upper limit. The amount of donated money that can be claimed as deduction with or without an upper limit depends on the entity to which you are donating.

Under section 80G comes another sub-section, 80GGA which exempts the money donated towards any of the following causes: Any sum paid to a college, university or organization that is registered with the Income Tax Department and is involved in scientific research.

Subscribe to the exclusive updates!