Overall, most of the assessee generally would have the basic know-how relating to deduction available under section 80G of the Income Tax Act. Broadly speaking, the deduction under section 80G is available in respect of the contribution / donations made to the specified charitable institutions or funds etc.
The current article would try to enhance the basic know-how to the expertise one by providing the complete explanation on the provisions attached with deduction under section 80G of the Income Tax Act.
Persons eligible for claiming deduction under section 80G –
Deduction under section 80G can be claimed by all the types of taxpayers like individual, HUF, AOP, company, firm etc.
Donations / contributions that qualify for deduction under section 80G –
Under section 80G, the donations / contribution is divided into the following four groups –
1. Donations qualified for 100% deduction without qualifying limit.
2. Donations qualified for 100% deduction subject to 10% of the adjusted gross total income.
3. Donations qualified for 50% deduction without qualifying limit.
4. Donations qualified for 50% deduction subject to 10% of the adjusted gross total income.
Bifurcating hereunder various specified funds based on the above four groups –
| Sr. No. | Donation type | Funds covered |
| 1 | Donations qualified for 100% deduction without qualifying limit.
|
1. National Defence Fund established up by the Central Government;
2. Africa (Public Contributions – India) Fund; 3. Prime Minister’s National Relief Fund; 4. Prime Minister’s Armenia Earthquake Relief Fund; 5. National Foundation for Communal Harmony; 6. An approved educational institution or university of National eminence; 7. Zila Saksharta Samiti established in any district under the chairmanship of the Collector of that district for the purpose of improvement of primary education in towns and villages and also for literacy and post literacy activities; 8. Fund set up by the State Government for the medical relief to the poor; 9. National Illness Assistance Fund; 10. National Blood Transfusion Council or State Blood Transfusion Council; 11. National Trust for Welfare of Persons with Mental Retardation, Cerebral Palsy, Multiple Disabilities and Autism; 12. National Sports Fund; 13. National Cultural Fund; 14. Fund for Technology Development and Application; 15. National Children’s Fund; 16. Lieutenant Governor’s Relief Fund or the Chief Minister’s Relief Fund with respect to any State or Union Territory; 17. The Air Force Central Welfare Fund or the Indian Naval Benevolent Fund or the Army Central Welfare Fund established by the armed forces of the Union for the welfare of the present and past members of such forces or their dependants; 18. Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996; 19. The Maharashtra Chief Minister’s Relief Fund during October 1, 1993 and October 6, 1993; 20. Chief Minister’s Earthquake Relief Fund, Maharashtra; 21. Any fund set up by a State Government of Gujarat solely for giving relief to the victims of the earthquake in Gujarat; 22. Any institution, fund or trust to which Section 80G(5C) applies for giving relief to the victims of the earthquake in Gujarat (contribution made during the period January 26, 2001 and September 30, 2001); 23. Swachh Bharat Kosh (from FY 2014-15); 24. Clean Ganga Fund (from FY 2014-15); 25. National Fund for Control of Drug Abuse (from FY 2015-16). |
| 2 | Donations qualified for 100% deduction subject to 10% of the adjusted gross total income.
|
1. Government or any approved local authority, institution or association to be operated for the purpose of encouraging family planning;
2. Donation by a Company to an Indian Olympic Association or to any other notified association / institution formed in India for the development of infrastructure for games and sports in India or the sponsorship of games and sports in India. |
| 3 | Donations qualified for 50% deduction without qualifying limit.
|
1. Jawaharlal Nehru Memorial Fund;
2. Prime Minister’s Drought Relief Fund; 3. Indira Gandhi Memorial Trust; 4. Rajiv Gandhi Foundation. |
| 4 | Donations qualified for 50% deduction subject to 10% of the adjusted gross total income.
|
1. Any other fund / any institution which satisfies conditions mentioned in Section 80G(5);
2. Any authority established in India for the purpose of dealing with and satisfying the requirement for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or both; 3. Government / any local authority to be operated for any charitable purpose other than the purpose of promoting family planning; 4. Any corporation mentioned in Section 10(26BB) for promoting the interest of the minority community; 5. For repairs or renovation of any notified temple, mosque, gurudwara, church or other place. |
Understanding the concept of adjusted gross total income –
As seen above, the eligible deduction of donations at two points are restricted to 10% of the adjusted gross total income, and hence, it is significant to understand the concept of adjusted gross total income. Adjusted gross total income can be calculated by applying the following formula –
| Gross total income (sum of income under all heads) | XXXX |
| (-) Deductions u/s 80C to 80U (except section 80G) | XXXX |
| (-) Exempt income | XXXX |
| (-) Short term capital gains on sale of shares u/s 111A | XXXX |
| (-) Long term capital gains | XXXX |
| (-) Income covered to in sections 115A, 115AB, 115AC, 115AD and 115D concerning to non-resident and foreign companies | XXXX |
| Adjusted gross total income | XXXX |
Eligible Mode of payment –
For claiming the deduction under section 80G, it is important to understand the acceptable mode of payment through which donation/contribution can be made.
Deduction under section 80G is available only when the contribution is made to specified funds through cheque or draft or cash. However, it is significant to note here that with effect from the assessment year 2018-2019, maximum cash contribution that is allowed as a deduction under section 80G is restricted to INR 2,000/-.
Further, please note that any type of donations made in kind like for example donation of clothes, food materials, medicines etc. does not qualify for deduction under section 80G.
Frequently Asked Questions (FAQ) –
1. What is section 80g?
Section 80g provides deduction towards contribution / donations made by the any type of assessee to specific funds or charitable institutions.
2. What is the adjusted gross total income for 80g?
Adjusted gross total income can be calculated by applying the following formula –
| Gross total income (sum of income under all heads | XXXX |
| (-) Deductions u/s 80C to 80U (except section 80G) | XXXX |
| (-) Exempt income | XXXX |
| (-) Long term capital gains | XXXX |
| (-) Short term capital gains on sale of shares u/s 111A | XXXX |
| (-) Income mentioned to in sections 115A, 115AB, 115AC, 115AD and 115D concerning to non-resident and foreign companies | XXXX |
| Adjusted gross total income | XXXX |
3. Is 80g part of 80c?
Deduction of donation to specified charitable institution / funds available under section 80g is allowed over and above the limit specified under section 80C.
4. What is qualifying limit in 80g?
Qualifying limit in 80g means lower of the following amount –
- Depending upon the type of donation, 100% or 50% of donation amount; or
- 10% of the adjusted total gross total income.
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