Section 80 G of Income Tax Act

Section 80 G of the income tax act is a facility that allows taxpayers to claim various deductions for their contributions that are made as donations. The deductions that are made under Section 80 G of the income tax act, are available for those contributions that are made to specific relief funds and charitable institutions. However, the deductions can not be claimed by all the charitable donations. Only the donations that are made to specified funds will be considered as a deduction. Section 80 G of the income tax act was introduced by the government of India in order to encourage individuals to donate. The government wishes to motivate people to donate for worthy causes by availing income tax relief.

Under Section 80 G of the income tax act, the amount that is donated can be claimed as a  deduction while filing an ITR. These deductions can be claimed by any individual, Partnership firm, HUF or a company or any other types of taxpayers disregarding the type of income they have. All the trusts and charitable institutions that are registered under Section 80 G of the income tax act are given a registration number by the IT Department. The donors must make sure that their receipts contain this registration number. The registration number must be valid on the donation date. If the registration number provided under Section 80 G of the income tax act is not valid, then the donation will be declared ineligible to be a deduction.

Deduction Amount Under Section 80 G of the Income Tax Act

Donations that are paid to prescribed trusts or charitable institutions(which are eligible for tax deductions) are subject to some specific conditions. The donations that are made under Section 80 G of the income tax act are categorised as follows:

Donations having 100% deduction(No qualifying limit)

Donations that are made under this category of Section 80 G of the income tax act, one is eligible to acquire a 100% tax deduction and they are  not subject to the requirement of achieving any sort of qualifying criteria. The deductions that qualify for the following are Donations made to the National Defence Fund, Prime Minister’s National Relief Fund, The National Foundation for Communal Harmony, National or State Blood Transfusion Council, and many more.

Donations having 50% deduction(No qualifying limit)

All the donations that are made to the trusts such as Prime Minister’s Drought Relief Fund, National Children’s Fund, Indira Gandhi Memorial Fund and others are all eligible for a deduction of 50% on the amount that is donated.

Donations having 100% deduction(for up to 10% of adjusted gross total income)

All the donations that are made to the local authority or to the Indian Government in order to encourage family planning and all the donations that are done to the Indian Olympic Association are eligible for deduction under this category of Section 80 G of the income tax act. In these cases, a maximum of 10% of the Adjusted Gross Total Income of the donor is qualified for tax deductions.

Donations having 50% deduction(For up to 10% of the total adjusted gross income)Donations that have been made to a local authority or to the government which will be used for a charitable purpose. In these cases, up to 10% of the adjusted gross total income of the donor will be qualified for deductions.

Adjusted Gross Total Income under Section 80 G of the income tax act

“Adjusted Gross Total Income” is used to refer to gross total income which is the total of income under various categories in order to provide relief under the various provisions of Chapter VI-A which is reduced by the following as:

• Amount that is deductible under Section 80U and 80CCC(without the inclusion of Section 80G of the income tax act)
• Exemption of income according to Section 10 of the Income Tax Act
• Capital gains that are long term
• Short term capital gains that will be taxable at the rate of 15% under Section 111A of the Income Tax Act
• Incomes mentioned in Sections 115A, 115AB, 115AC, 115AD, related to foreign companies or non-residents.

Required Documents

The taxpayers who wish to claim deductions under Section 80 G of the income tax act, must possess the following documents in order to support their claim:

• Donation Receipt

It is compulsory to have a donation receipt which is issued by either the Trust or the Charity which receives the donation. The following details should be present in that receipt:

• Address and Name of the NGO or Trust
• Donor’s Name
• Donated amount
• Registration number of the trust as assigned by the IT department under Section 80 G of the Income Tax Act with the validity period.

• Form 58A

Those taxpayers who wish to claim 100% deductions must possess Form 58 A. If such a taxpayer does not have form 58 A, then he will not be granted 100% tax deductions under Section 80 G of the income tax act. This form will only be availed for specific types of eligible deductions.

Conclusion

Through this blog, we came to know about Section 80 G and its importance. We also learned that the reason behind introducing Section 80 G of the income tax act, was to encourage more and more people to donate.