Donating a sum of money for social welfare purposes is a noble act. We all should consider contributing a certain sum to social causes to fulfil our social responsibility. Even the government extends its support for such contributions and provides tax relief in the form of tax deductions. Such tax deductions are administered under Section 80G.
What is Section 80G
Contributions to relief funds and humanitarian organizations can be deducted under Section 80G of the Internal Revenue Code. Any taxpayer, whether a person, a corporation, a partnership, or another entity, may claim this deduction.
Section 80G does not apply to all donations. Only contributions to specified trusts are eligible for a tax-deductible.
Eligibility Criteria to Claim Deduction under Section 80G
The below-listed taxpayers are eligible to claim a deduction under this section-
- Non-Resident Indian (NRI)
- Hindu Undivided Firm (HUF)
- Any other person
It is important to note that this deduction is not available for those who have opted for the new tax regime.
How to Make the 80G Deduction Claim
The following information must be used on your Income Tax Return in order to assert this deduction.
- PAN Card
- Contribution Amount
- The amount eligible for deduction
80G Tax Exemption
Any contribution to a rescue fund or charity organization is tax-deductible. This is a reduction that can be used by calculating net taxable revenue. Donation deductions, on the other hand, are subject to the following conditions:
- Not every contribution is eligible for a full tax-deductible. When seeking a deduction, the assessee must adhere to the organization’s eligibility.
- Specific taxpayers, Indian corporations, alliance firms, and other assessees will all demand deductions.
- A cash contribution in excess of Rs 2,000 is not available for a tax deduction.
- Any contribution in kind, such as clothing, food, or drugs, does not count for a tax deductible or benefit.
The amount of the contribution depends depending on the eligibility requirements. Section 80G allows for a deduction of either 100 per cent or 50 per cent, with or without limitations.
80G Donation Limit
Not every donation counts for a 100 per cent deduction under section 80G. It is contingent on the organization of which the contribution is made is eligible. The tax advantage is determined by the organization’s eligibility. Furthermore, the deduction may be 100% or 50%, with or without limitations.
The number that can be deducted from a contribution is known as the qualifying amount. To prevent any misrepresentation of the income tax return, any assessee must carefully measure the qualified number.
Donations are eligible for a one-hundred per cent deduction under Section 80G, with no qualifying limits.
- National Defence Fund by the Central Government
- Prime Minister National Relief Fund
- National Foundation for Communal Harmony
- A University/educational institution of National eminence
- Zila Saksharta Samiti in districts under the chairmanship of the collector of that district
- Fund by State Government for medical relief to the poor
- National Illness Assistance Fund
- National Blood Transfusion Council
- National Sports Fund
- National Cultural Fund
- National Children’s Fund
- Chief Minister’s Earthquake Relief Fund
- 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)
Latest News and Updates about Section 80G
In Budget 2023, certain changes were made to the 80G exemption list. The Budget provided that donations made to the below-listed funds will not be eligible for any deductions under Section 80G-
- Prime Minister’s National Relief Fund
- National/State Blood Transfusion Council
- National Defense Fund
- The National Foundation for Communal Harmony
Donations eligible for a 50% deduction without any qualifying limit are as follows-
- Prime Minister's Drought Relief Fund
- Indira Gandhi Memorial Trust
- Rajiv Gandhi Foundation
- Jawaharlal Nehru Memorial Fund
How to Calculate Deduction under 80G?
Follow these steps to calculate the amount of deduction under 80G:
- Examine the category into which the fund/charitable institution falls (100% or 50% deduction, with or without a maximum/qualifying limit).
- When a payment is made to the first category, there is no need for additional calculations; simply claim 100% or 50% of the contribution amount as taxable income.
- When making a contribution to the second category, you must first determine the maximum/qualifying 80G deduction limit. The maximum/qualifying level is 10% of the adjusted gross total income.
Now apply this method to get the amount of deduction:
- Gross Qualifying Limit = Total Donations to Category 2
- Net Qualifying Limit = 10% of the adjusted gross total income.
- Amount Deductible = 100%/50% of the donation amount, subject to the qualifying maximum.
What is Section 80GGA
Donations to science study or agricultural development may be deducted under Section 80GGA. Except for those who have an income (or loss) from a company or occupation, all assessments are eligible for this deduction.
Donations can be made in the form of a cheque, a draft, or currency; however, cash donations exceeding Rs 10,000 are not eligible for tax deductions. Tax refunds are available for 100 per cent of the money donated or contributed.
Donations Eligible Under Section 80GGA
Following are some of the donations that can be claimed under 80GGA deduction-
- Any amount paid to a research organization that conducts scientific research, or any sum paid to a college, university, or other institution for the purpose of scientific research, as long as the sum is authorized by the specified authority under section 35(1)(ii)
- Sums paid to a research organization that conducts social science or statistical research, as well as sums paid to a college, university, or other institution for the same reason, must both be authorized by the specified authority under section 35(1)(iii)
- Amount charged to a registered agency or organization that participates in a rural development initiative that has been approved under section 35CCA.
- Amount charged to an accredited agency or organization for the purpose of educating people to adopt rural development programs.
- Amount charged to a public sector corporation, a local government, or an authorized agency or organization for the implementation of projects or schemes authorized under section 35AC.
Any charges that are deductible under section 80GGA are not deductible under any other clause of the income tax act.
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