Have you donated money for charity, social or philanthropic purposes, or, have made contributions towards a National Relief Fund? If yes, then you could use these donations to reduce your tax outgo. The Income Tax Act encourages charitable deeds towards the poor and needy, and offers donors tax benefits under Section 80G. Read on to find out more about this section.

Understanding Section 80G

Section 80G offers a tax deduction for donations to certain prescribed funds and charitable institutions. Here are the details of the section.

Eligible Assesses

This section is applicable to all assessees, who make an eligible donation, whether an individual, HUF, NRI or a company.

Deduction Limit

The extent of deduction is either 50% or 100% of the contribution, depending on the charitable institution donated to.

For certain funds, the aggregate deduction is limited to 10% of the “Adjusted Gross Total Income”. So, in such cases, even if you do make a donation larger than 10% of your Adjusted Gross Total Income, the donation amount eligible for claiming a deduction would be capped at 10% of the Adjusted Gross Total Income.

The ‘adjusted gross total income’ for this purpose is the gross total income (i.e. the sub total of income under various heads) reduced by the following:

  • Amount deductible under Sections 80CCC to 80U (but not Section 80G)
  • Exempt income
  • Long-term capital gains
  • Short- term capital gains taxable @15 per cent under section 111A.
  • Income referred to in Sections 115A, 115AB, 115AC, 115AD relating to non-residents and foreign companies.

Scope of Deduction

  • The donation may be paid either out of taxable or exempted income.
  • Donations in kind do not entitle for any tax benefits. For example, during natural disasters such as floods, earthquake, and many organisations start campaigns for collecting clothes, blankets, food etc. Such donations will not fetch you any tax benefits. No deduction under this section is allowable in case the amount of donation  exceeds Rs 10000/- from A.y 2013-14 to 2017-18 (Rs 2000/- from A.y 2018-19) unless the amount is paid by any mode other than cash.
  • Donations to foreign charitable trusts are not eligible for any deduction.
  • Political parties (BJP,CPI,Congress,CPM,BSP,SP) are eligible for 100% deduction.
  • For donations made to Indian Olympic Association, any association notified u/s 10(23) for development of infrastructure for sports or games, or for sponsorship of sports or games, only a company is eligible for deduction.
  • Donations made to not all charitable institutions qualify for a deduction. Here is a list of approved charitable institutions and funds that qualify for a deduction.
  • You cannot claim deduction under section 80G for donations made to political parties for any reason, including paying for brochures, souvenirs or pamphlets brought out by such parties. However deduction for contribution ( other than cash contribution) to political parties can be claimed u/s 80GGB/80GGC

Donations with 100% deduction without any qualifying limit:

Prime Minister’s National Relief Fund

2. National Defence Fund set up by Central Government.

3. Prime Minister’s Armenia Earthquake Relief Fund

4. The Africa (Public Contribution – India) Fund

5. National Children’s Fund

6. The National Foundation for Communal Harmony

7. Approved university or educational institution of national eminence

8. The Chief Minister’s Earthquake Relief Fund, Maharashtra

9. Any fund set up by the State Government Of Gujarat for providing reliefs to the victims of earthquake in Gujarat.

10. Fund set up by the State Government for the medical relief to the poor.

11. Donations made to Zila Saksharta Samitis.

12. The National Blood Transfusion Council or a State Blood Transfusion Council.

13. The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air Force Central Welfare Fund.

14. National Illness Assistance Fund

15. Chief Minister’s or Lt. Governor’s Relief Fund

16. National Sports Fund

17. National Cultural Fund

18. Central Govt.’s Fund for Technology Development & Application

19. National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation & Multiple Disabilities

20. Andhra Pradesh Chief Minister’s Cyclone Relied Fund

Donations with 50% deduction without any qualifying limit.

1. Jawaharlal Nehru Memorial Fund

2. Prime Minister’s Drought Relief Fund

3. National Children’s Fund

4. Indira Gandhi Memorial Trust

5. The Rajiv Gandhi Foundation

Donations to the following are eligible for 100% deduction subject to 10% of adjusted gross total income

Donations to the Government or a local authority for the purpose of promoting family planning.

2. Sums paid by a company to Indian Olympic Association.

3. Swachh Bharat Kosh ( From A.y 2015-16)

4. Clean ganga Fund ( From A.y 2015-16)

5. National Fund For control of drug abuse (From A.y 2016-17)

Donations to the following are eligible for 50% deduction subject to 10% of adjusted gross total income

1. Donation to the Government or any local authority to be utilized by them for any charitable purposes other than the purpose of promoting family planning.

2. Any Authority referred to in section 10(20A) for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning/development of town and village.

3. Any Corporation specified in section 10(26BB) for promoting interest of minority community

4.  Any notified temple, mosque, gurudwara church or other place (for renovation or repair)

The Donation Receipt

In order to claim deduction, it is mandatory for the donor to furnish a proof of payment towards the eligible fund or institution. A stamped receipt is issued by the recipient trust in this regard, which must be attached by the assessee along with the income tax returns.

The receipt must include the following details.

  • Name and address of the trust
  • The name of the donor
  • The amount donated, mentioned in words and figures
  • The registration number of the trust, as given by the income tax department under section 80G, along with its validity period.

Tax benefits cannot be claimed without the above mentioned details and document.

 Donations deducted from Salary

Where employees have contributed towards eligible charitable causes from their salaries and the donation receipt is on the employer’s name, a deduction under section 80G could still be claimed. In such cases, the employer would need to issue a certificate mentioning that the contribution was made from the employee’s salary account.

There are many trusts in India engaged in charitable activities. In order to ensure that only contributions to genuine trusts entail a tax benefit, the government has brought in registration of trusts. Thus, before you donate, check to see, if the trust you are donating to is registered and has the tax exemption certificate, which is popularly known as the 80G certificate.

Also Read:

Deductions U/s 80G for Donation

 This Independence Day, let’s start contributing to Indian Security forces actively

Source: InvestmentYogi is one of the leading personal finance websites in India

(Republished With Amendments)

More Under Income Tax



    DT. 17.09.2018

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