All about Section 80G of Income Tax Act
By Advocate Kohal Dev Sharma, Punjab and Haryana High Court, Chandigarh
Have you ever thought about donating funds for charity or any other social purposes? Have you ever made contributions towards any Fund that has been set up for a national cause? If yes, then there is a lot that you can do to utilize to gain income tax benefits from such contributions. As per the Income Tax Act, 1961 charitable deeds are highly encouraged and therefore as per its Section 80G, benefits are passed on to the donors who give away funds they have earned in order to help others.
As per Section 80G of the Income Tax Act these are the provisions.
A lot of tax deductions for donations made to certain charitable funds and institutions are offered as per Section 80G of the Income Tax Act. Here are a few details that are relevant:
Who is Eligible?
As per Section 80-G of the Income Tax Act, a person is eligible for income tax deductions and benefits only with regard to the amount that has been donated to a foundation or institution or a specific relief fund. One can claim deductions while filing the Income Tax Returns. Deduction for the donation can be claimed by any tax payer irrespective of the source of income of any such donation. All assesses, whether an NRI or a resident Indian, HUF or a company are covered under this section.
What is the Deduction Limit?
The limit for tax deduction as per Section 80G of ITA is either of the two, 50% or 100% as what matters is the charitable institution to which such an amount is being donated.
Here is a list of charitable organizations that offer 100% tax deduction without any qualifying limit:
- Prime Minister’s National Relief Fund
- Prime Minister’s Armenia Earthquake Relief Fund
- National Defence Fund
- The National Foundation for Communal Harmony
- The Chief Minister’s Earthquake Relief Fund, Maharashtra
- Donations made to Zila Saksharta Samitis
- The Africa (Public Contribution – India) Fund
- Approved university or educational institution of national eminence.
- The National Blood Transfusion Council or a State Blood Transfusion Council.
- National Illness Assistance Fund
- The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air Force Central Welfare Fund.
- Chief Minister’s or Lt. Governor’s Relief Fund
- Army Central Welfare Fund, Indian Naval Ben. Fund, Air Force Central Welfare Fund.
- National Cultural Fund
- National Sports Fund
- / local authority/ institution/ association towards promoting family planning
- National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation & Multiple Disabilities
- Central Govt.’s Fund for Technology Development & Application
- Indira Gandhi Memorial Trust
- The Rajiv Gandhi Foundation
- Charitable organizations with 50% deduction without any qualifying limit
- Indian Olympic Association/ other such notified association
- Andhra Pradesh Chief Minister’s Cyclone Relied Fund
- Prime Minister’s Drought Relief Fund
- Jawaharlal Nehru Memorial Fund
- National Children’s Fund
- Donations for repair/ renovation of notified places of worship
- World Vision India
- Udavum Karangal
- Donations to govt./ local authority for charitable purposes (excluding family planning)
- Authority/ corporation having income exempt under erstwhile section or u/s 10(26BB)
There are a few donations for which the aggregate deduction limit is 10 per cent of the ‘Adjusted Gross Total Income’. Therefore, even if a person is donating funds that are eligible for tax deduction, it would be no more than 10 per cent of the Adjusted Gross Total Income which is the Gross total income minus the long-term capital gain plus the short term capital gain and all the deductions under Section 80CCC to 80U, except for any other deduction in this section.
Following donations are subjected to 10% of the Adjusted Gross Total Income:
– For 100% Deduction
- Any Govt. or a local authority for the promotion of family health planning
- Any amount paid to the Indian Olympic Association
– For 50% Deduction
- Any Govt. or a local authority for a charitable purpose apart from family health planning.
Additional Sub-sections of Section 80G, ITA
No one can claim tax deductions subject to just Section 80G of the ITA and there are some sub-sections as well. These are as follows:
Section 80GGA – As per this section 100% tax deduction is applicable for any donation that has been made to the entities that are involved in scientific research and rural development under this section.
Section 80GGC – As per this section tax deduction up to 100% is available for donations made towards any political party that has been registered under Section 29A of the Representation of the People Act, 1951 or any electoral trust.
What are the documents that are required for claiming Tax deductions under this section?
There is a need for proper documentation to claim tax advantages under this section. Here is an explanatory list of documents that are needed to claim deductions in Income Tax.
- Stamped Receipt – A receipt that mentions the name, the address and PAN of the trust, the name of the donor who made the donation and the amount that has been donated is necessary for claiming tax deductions on the donation. In case a person is eligible for 100% tax deduction there is a requirement to attach Form-58 as well.
- Registration Number of the Trust– The receipt that is provided by such a trust or institution should also have the registration number of the trust, duly valid along with the dates of said validity duly mentioned.
- Photocopy of 80-G Certificate- A donor must also make sure that he or she attaches the photocopy of 80-G certificate along with the receipt.
The government of India has made these provisions for promoting the sense of charity amongst its individuals who are capable of helping other in any financial way that they can. There is absolutely no way to do a better deed than to help others in times of need and doing something good for the betterment of society is truly a noble act. The Government keeps this in mind and in order to bring out the goodness of the individuals of the society, the provisions under this act have been made.
About the Author:
Kohal Dev, is a lawyer by profession and has a penchant for writing and his ability to juggle several tasks at a time, in the most effective and efficient manner is something that allows him to deliver content fresh out of the box. His extensive experience in the field of Law, Finance, Real Estate and Marketing allows him to write some of the most amazing blogs and articles in exactly the way they are required to be done. When not at work, he can be found reading and of course, writing.