Donations Under Section 80G and 80GGA Of The Income Tax Act

Donating something to a charitable cause is a noble act. Everyone capable of doing so should consider donating a certain amount to social welfare. The government of India also extends its support to such contributions by offering tax relief deductions under the Income Tax Act Section 80G.

Section 80G allows a tax deduction in respect to the contributions made to charitable institutions and social welfare relief funds. Such sections encourage Indians to fulfil their social responsibility. Contributions made to the government under the refugee fund can be claimed up to 50% or even 100% (qualifying limit) without any restriction under this section.

In this blog, we will explore Section 80G and Section 80GGA.

What is Section 80G?

Section 80G of the Indian Income Tax Act allows the tax relief deduction to taxpayers who have made donations to the government-prescribed funds and the charitable institutions. However, ensure that Section 80G does not apply to all the donations. Only the contributions made towards specified trusts are eligible for tax deduction.

Eligibility Criteria for Section 80G Deduction

Taxpayers listed below are eligible to claim a deduction under section 80G.

• Individuals
• Firms
• Companies
• Hindu Undivided Firm (HUF)
• Non-Resident Indian (NRI)
• Or any other person.

However, it is important to know that the deduction under section 80G is not available for those who have opted for a new tax regime.

Mode of Payment Under Section 80G

For the taxpayer to claim a deduction under section 80G, donations must be made through the following modes.

• Demand Draft
• Cash for donations up to 2,000 Rs
• Cheque.

Please note: Contributions like clothes, medicine, food materials, and donations of above Rs 2000 in cash do not qualify for tax relief deductions under Section 80G.

Donations above Rs 2000 should not be made with cash as a mode of payment to qualify for a deduction under Section 80G.

Donations Eligible For 100% Deductions

Below is a list of eligible donations or 100% Section 80G deductions without a qualifying limit.

1. National Defense Fund Set Up By The Central Government.
2. Prime Minister National Relief Fund and PM CARES Fund.
3. Nation Foundation for Communal Harmony.
4. A central government-approved university/educational institution of National Eminence.
5. Zila Saksharta Samiti is constituted in any district under the chairmanship of the collector of that district.
6. The state government set up medical relief for the underprivileged people.
7. National Illness Assistance Fund
8. National Blood Transfusion Council or any State Blood Transfusion Council.
9. National Trust for Welfare of Persons with Autism, Cerebral Palsy, Multiple Disabilities, and Mental Retardation.
10. National Sports Funds
11. National Cultural Funds
12. Funds for Technology Development and Application
13. National Children's Fund
14. Chef Minister Relief Fund or Lieutenant Governor's Relief Fund with Direct to any State or Union territory yet.
15. The Indian Navy Benevolent Fund, The Army Central Welfare Fund, the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister's Cyclone Relief Fund, 1996.
16. The Maharashtra Chief Minister's Relief Fund, October 1, 1993, to October 6, 1993.
17. Chief Maharashtra Earthquake Relief Fund, Maharashtra.
18. The state government set up a fund exclusively for providing relief to the victims of earthquakes in Gujarat.
19. Any institution, trust, or public fund under section 80G(5C) that applies for providing relief to earthquake victims in Gujarat concerning the contract made between January 26, 2001, and September 30, 2001.
20. Prime Minister of Armenia Earthquake Relief Fund.
21. African Public Contribution Fund.
22. Swacch Bharat Kosh.
23. Clean Ganga Fund.
24. National Fund for Control of Drug Abuse (Applicable from financial year 2025 - 2016).

Note: The Prime Minister's Drought Relief Fund is eligible for a 50% deduction without a qualifying Limit as per section 80G donation limit.

How To Calculate Tax Relief Deduction Under Section 80G

Step 1: First, compute your total income before claiming any deductions under Chapter VI-A, including those under section 80G.

Step 2: Now, calculate the adjusted Total Income:

(-)Amount deductible under Sections 80C to 80U, except Section 80G from the Gross Total Income.

Also ensure to exclude the LTCG, which is long-term capital gains, STCG short-term capital gains under section 111A, Income under Section 115A, 115AB, 115AC, and 115AD, along with all he income that falls under chapter VI-A, except 80G.

The conclusive figure is the Adjusted Total Income.

Step 3: Now, calculate 10% of the calculated adjusted total. This is the qualifying Limit. This applies to donations subject to a limit.

Step 4: Categorize donations into the following categories.

• 100% deduction without limit (a).
• 50% deductions without limit (b).
• 100% deduction subject to qualifying limit (c)
• 50% deduction to be subject to the qualifying limit (d).

Step 5: Allow full deduction for donation in categories (a) and (b).

Step 6: Apply the qualifying Limit to the Remaining Donations

Step 7: Compute total deductions under section 80G of the Indian Income tax Act by adding

Full deduction from step 5 and deductions under the qualifying limit from step 6.

Documents Required to Claim Deduction Under Section 80G

To be able to claim a deduction under Section 80G, the following details must be submitted in the Income Tax Return.

• Name of the person
• PAN of the person
• Address of the person
• Amount of contribution
• The amount that is eligible for deduction.

Documents:

Duly Stamped Receipt: This receipt must be issued by the trust or the charitable institution where you donate the amount. The receipt must include details such as the name, address, amount donated, and PAN number of the trust.

Registration Number Of The Trust: The Income Tax Department of India assigns a unique registration number to all eligible trusts or charitable institutions that fall under this section. Donors must ensure that the receipt has the registration number.

What is Section 80GGA?

The donations made under rural development and scientific research fall under section 80GGA. The tax relief deduction under section 80GGA is allowed to all he assesses except those who have their income or loss from sources like a profession or a business.

However, this is to ensure that deduction under this section is not available to an individual who opts to pay taxes under the new tax regime.

Donations under this section can be made as is done for Section 80G, which is a mandatory deduction from a cheque and cash up to a limit of Rs 2000. This amount donated under section 80G AA is 100% eligible for tax relief deductions.

For Non-resident Indians (NRIs) with income sourced in India, ensure that the donations under this section must be to approved research or rural development institutions. However, if there is a payment from a foreign account, it must comply with the RBI guidelines.

Eligible Donation Under Section 80GGA.

The following are the donations eligible for section 80GGA deduction.

• Chair table contributions made to a research organization that conducts scientific research or any amount paid to a university, college, or any other institution with the purpose of scientific research that is approved by the authority under section 35(1)(ii).
• Contributions made to research organizations that conduct statistical research or social science research. Amount paid to university or other institutions for the same reason that are authorized by a specific authority under section 35(1)(iii).
• Any contributions made towards an institution or association that is approved under section 35CCA that works around the rural development program.
• Any amount paid to an approved institutions or association that demonstrate the ranking or obligations for implementation programs for rural development.
• Any amount to a local authority, public sector company, or an approved institution or association that aims to create projects or schemes that fall under section 35AC.
• The sum that is paid to notify a rural development fund.
• The amount paid to the notified fund for afforestation.
• The amount that is paid to the National Poverty Eradication Fund.

Ensure that any charges that are deductible u/s 80GGA must not be deducted under any other law of the Income Tax Act.

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