Deduction under Section 80G and 80GGA of Income Tax Act

Government has notified several charitable funds or societies, where you can donate your funds. Section 80G and Section 80GGA of Income Tax Act provides deduction in respect of such donations.

There are many trusts who are engaged in charitable activities but you should be aware of the fact that deduction of donation is available only in respect towards the trusts which are government notified.

Eligibility of deduction under section 80G

As per section 80G of Income Tax Act 1961, every assesse whether he is an individual, company, firm or any other person, is eligible to avail deduction.
If the donation amount exceeds Rs.2000, then payment should be made by any mode other than cash.
If you made a donation in kind like clothes, food etc. then the same is not eligible for taking deduction under section 80g.
Deduction is available only for the donation made to government notified institutions.

Amount of Deduction allow under Section 80G

(A) Deduction available for 50% (Without qualifying limit)

Following are the institutions where you can donate and can take deduction for 50% of amount donated:

Rajiv Gandhi Foundation
Jawaharlal Nehru Memorial Fund
Prime Minister’s Drought Relief Fund
Indira Gandhi Memorial Trust

(B) Deduction available for 100% (Without qualifying limit)

Following are the institutions where you can donate and avail deduction for 100% of amount donated:

National Defense Fund by the Central Government
Prime Minister National Relief Fund
National Foundation for Communal Harmony
An approved Uni. / educational institution of National eminence
Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector
Fund set up by State Government for medical relief to the poor
National Illness Assistance Fund
National Blood Transfusion Council or State Blood Transfusion Council
National Trust for Welfare for Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities
National Sports Fund
National Cultural Fund
Fund for Technology Development and Application
National Children’s Fund
Chief Minister’s Relief Fund / Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
The Army Central Welfare Fund / the Indian Naval Benevolent Fund / the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
The Maharashtra Chief Minister’s Relief Fund during 01-10-1993 and 06-10-1993
Chief Minister’s Earthquake Relief Fund, Maharashtra State
Any fund set up by the State Government of Gujarat for providing relief to the victims of the earthquake in Gujarat
Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of the earthquake in Gujarat (contribution made during 26-01-2001 and 30-09-2001) or
Prime Minister’s Armenia Earthquake Relief Fund
Africa (Public Contributions, India) Fund
Swachh Bharat Kosh (start from FY 2014-15)
Clean Ganga Fund (start from FY 2014-15)
National Fund for Control of Drug Abuse (start from FY 2015-16)

(C) Deduction available for 100% (With qualifying limit)

Following donations are eligible for 100% deduction but subject to qualifying limit:

Donation to government, local authority, institution or associations, which is utilized for the purposes of promoting family planning.
Donation by company to Indian Olympic Association or other notified institution for development of infrastructure for sports.

(D) Deduction available for 50% (With qualifying limit)

Following are the donation eligible for 50% deduction but subject to qualifying limit:

Donation to notified temples, mosque, gurudwara, church or any other religions places for renovation or repair.
Donation to government, local authority, institution or association, for any charitable purpose other than family planning.
To any corporation established by government for promoting the interest of minority community
Donation to any authority constituted in India for the purpose of housing accommodation or for planning, development or improvement of city, town, village.
To any fund notified under section 80G

So we have seen deduction of donation is four categories (A), (B), (C), (D). Out of these (A) and (B) can avail deduction 50% and 100% of the amount donated.

Eg. If you donate in category (A) Rs.10000 then you can avail deduction of Rs. 5000 (i.e. 50% of amount donated).

But in Category (C ) and (D) while calculating the deduction you should be taken into account the concept of qualifying limit.

What is Qualifying Limit under section 80G of Income Tax Act?

Qualifying limit is lower of the following two amounts:

10% of adjusted gross total income or
Actual donation made

For Calculating adjusted gross total income:

Particulars

Amount (Rs)

Gross Total Income

(-) Long term capital gain

(-) Short term capital gain u/s 111A

(-) Deduction u/s 80C-80U (except section 80G)

(-) Exempt Income

(-) Income under section 115A, 115AB, 115AC, 115AD and 115D( Non-residents and foreign companies)

-------

Adjusted gross Total Income

-------

Example: How to Calculate donation under section 80G?

Mr. A has the following particulars:

Income under the head salary Rs.210000
Income under the head house property Rs.170000
Long term capital gains Rs.65000
Short term capital gain u/s 111A Rs.42000

He has invested Rs. 40000 in NSC and Donation under section 80G as

Rajiv Gandhi Foundation Rs.10000
Temple notified Rs.20000
Charitable Intuition Rs.30000

Solution:

Particulars	Detail	Amount Rs.
Income under the head salary Income under the head house property Income under the head capital gain (-) LTCG (-) STCG u/s 111A	65000 42000	210000 170000 107000
Gross Total Income (-) Deduction 80C-Investment in NSC 80G *(-) Rajiv Gandhi Foundation (1000050%) (-) 50% Subject to qualifying limit (Note.1)**	40000 5000 17000	487000 62000
		425000

Note:

Least of the following in qualifying limit:

10% of adjusted gross total income: Rs. 340000 * 10% = Rs.34000
Actual Donation made: Rs.20000 + Rs. 30000 = Rs. 50000

Hence qualifying limit is Rs.34000

And 50% subject to qualifying limit is Rs. 34000 * 50%= Rs.17000

Calculation of Adjusted Gross Total Income

Particulars

Amount (Rs)

Gross Total Income

(-) Long term capital gain

(-) Short term capital gain u/s 111A

(-) Deduction u/s 80C-80U (except section 80G)

487000

(65000)

(42000)

(40000)

Adjusted gross Total Income

340000

Donation under section 80GGA

Section 80GGA provides deduction for donations made towards scientific research or rural development.
Every assessee can claim deduction under this section except those who have income under the head business and / or profession.
Donation in excess of Rs.10000 should be made through any mode other than cash.
100% of the amount donated is eligible for deduction.

Conclusions

Under Section 80G of Income Tax Act, Government has notified various charitable funds or societies into four parts, where you can donate your funds. And under section 80GGA you can also donate towards scientific research or rural development.

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