Deductions Under Section 80G

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80G deductions

Under section 80G, a taxpayer can claim a lot of deductions. The objective of this article is to understand the section, who is eligible for such deductions, what is the percentage of deductions and further gross adjustments to the total income. It also explains how to claim deductions.

There are several ways to obtain tax deductions in India. One of them is through donations. Donations to several philanthropic organisations and funds can be claimed as deductions. These deductions are earmarked under the Section 80G of the Income Tax Act, 1961, and are, of courses, over and above the more commonly discussed deductions under 80C.

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Although many amendments have been made, and the nature of donations or the organisations coming under the list of Section 80G has been reconsidered, the tax benefits provided under the section remain same, and will be here for a long time.

Let us look into some of the salient features of deductions under this section of the Income Tax Act and who or how one can benefit from it.

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Salient features of Deductions under Section 80G:

As mentioned earlier, the Section 80G deductions becomes eligible when an assesse makes a donation to the organisations mentioned under the Act, and has sufficient proof to claim the benefit.

Now, as to who are eligible for such deductions, every individual assesse, companies, HUF, firms and so on, can claim the benefit, provided they can furnish sufficient proof in the form of acknowledgements provided for the donations.

There is, however, a restriction on the kind or mode of payment.

a. The payments for such donations can only be made only by cheque, demand drafts or cash
b. If made in cash, the amount cannot exceed Rs. 10,000.
c. Any donations made in kind, such as donations of food, materials, clothing, and so on, cannot be claimed under Section 80G.

Percentage of deductions allowed

For the sake of convenience, the Income Tax department has listed the kind of donations and the percentage of benefits that can be claimed under it. While some may provide a 100% deduction in tax (for the amount donated), the others may give you a 50%.

All details regarding the percentage of advantage provided is available in the list provided under Section 80G.

List of donations that provide 100% Deduction (without limiting the contribution amount):

1. National Defence Fund (Central Government;)
2. National Foundation for National Harmony;
3. PM’s National Relief Fund;
4. A university or an educational institution approved by the government and of national eminence;
5. State Government Funds for medical relief of poor;
6. Zile Saksharta Samiti of any district, (with collector as chairman);
7. National Illness Assistance Fund;
8. National Trust for Welfare of persons with autism, cerebral palsy, mental retardation and multiple disabilities;
9. National Blood Transfusion Council (as well as state blood councils);
10. National Sports Fund
11. National Children’s Fund;
12. National Cultural Fund;
13. Funds for Technology Development and Application;
14. Chief Minister’s Relief Fund (Lt. Governor’s Relief Fund within a state or union territory);
15. Indian Naval Benevolent Fund, Army Central Welfare Fund;
16. Swaachh Bharat Kosh (applicable from financial year 2014-15);
17. Clean Ganga Fund;
18. National Fund for Control of Drug Abuse;

List of donations that provide 50% deduction in Tax:
1. Rajiv Gandhi Foundation
2. Jawaharlal Nehru Memorial Fund
3. Prime Ministers Drought Relief Fund
4. Indira Gandhi Foundation

Gross Adjusted Total Income

There are some deductions which are subject to adjustments in the gross income. Here are the details regarding the same:
An adjusted gross income is the gross total income, which is less than the following:
1. An amount that is deductible under Section 80CCC to 80U of the Act (but, excluding the deductibles under Section 80G)
2. Long-term capital gains
3. Exempt income
4. Incomes that are referred to, in Sections, 115A, AB, AC, AD and 115D, relating to the non-residents and the foreign companies.

List of donations that provide 100% deduction, subject to 10% of gross adjusted total income:
1. Any government or approved local authority, or institution associated with promoting family planning
2. A company’s donations to the Indian Olympic Association, or to other notified and authorized associations or institution established in India, for development of infrastructure for sports and games within India or any sponsorship of sports and games in India

List of donations that provide 50% deduction, subject to 10% of gross adjusted total income:
1. Any organisation, institution or funds that satisfies the conditions mentioned in Section 80G of the Act;
2. Any government or local authority promoting charitable purposes, other than family planning;
3. Any organisation or authority formed for the sole purpose of promoting and satisfying the need for housing accommodation or planning, development and improvement of cities, towns and villages or both;
4. Any corporation mentioned under Section 10 (26BB) of the Act for working in the interests of minorities in India;
5. Funds donated towards repair, renovation of mosques, temples or other such religious places within the country.

How to claim tax benefits under Section 80G

The deductions under Section 80G can be claimed at the time of submitting the tax returns. The details required to claim the deductions include:

a. Name and address of the donee;
b. PAN number of the donee;
c. The amount contributed towards the fund.

These details, along with a proof of donations, in the form of acknowledgements, receipts with the Section 80G deductions mentioned, need to be submitted at the time of filing for tax returns, to claim the benefits.

Simply said, anyone who donates to certain funds can claim deduction under section 80G when submitting the tax returns. In some cases, the deduction is 100% and in others 50%. The gross adjustments can vary. For claiming the deduction, one just requires the name, address, and PAN of the donee.

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    A lawyer with 14 years' experience, Vikram has worked with several well-known corporate law firms before joining Vakilsearch.

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