Section 80G of Income Tax Act

 Introduction

Charity organisations work tirelessly to help the less fortunate and needy sections of society. To support their work, the government provides tax deductions to citizens for donations to charities. Section 80G of the Income Tax Act governs the specific rules and general extent of charitable donation tax deductions.

What is Section 80G?

Section 80G of the Income Tax Act allows you to claim a tax deduction on charitable contributions made during the fiscal year when you file your income tax return. This puts you in a lower tax bracket and reduces your tax obligations. A unique feature of Section 80G is that there is no cap on the amount of your tax-deductible donation when filing an ITR for a specific number of charities.

Deduction under Section 80G - Terms & Conditions

Certain terms and conditions need to be met for claiming tax deductions under Section 80G. Three of the most important conditions are:

1. Tax deductions cannot be claimed for contributions over ₹2,000 made in cash. These changes were put in place by the budget of 2017.

2. Contributions made in kind are not eligible for tax deductions under Section 80G of the Income Tax Act.

3. Contributions made to trusts registered outside India are not eligible for tax deductions.

What is the Mode of Payment to Avail Section 80G?

The deductions applicable under Section 80G of the Income Tax Act can be claimed only when the contribution is done through a cheque, draft, cash. Any in-kind contribution like clothes, medicines, stationery will not qualify in the Section 80G deduction calculation. From FY 2017-18 onwards, cash donations above ₹2,000 are not to be considered in Section 80G deduction calculation. You will have to make the payment in any other mode than cash for an amount greater than ₹2,000. The donations made will be eligible in the Section 80G deduction limit up to 100% or 50% with or without restriction as prescribed in the section.

Eligibility for Claiming Deductions Under 80G

In order to claim tax deductions under Section 80G of Income Tax Act, you would have to meet the eligibility criteria mentioned below:

• NRIs contributing to applicable trusts

• Individuals and HUFs

• You should have relevant proof of your contributions

• You should have made the contribution to the charitable organisation from your taxable income. Donations made from non-taxable income is not eligible for deductions

Claiming 80G Tax Deductions

A proof of payment is of paramount importance when claiming deductions under Section 80G for charitable contributions. For a successful tax rebate, ensure that you collect a receipt of your donation from the charity that you donated to. The receipt needs to contain the following information:

1. Name of the donor

2. The amount that was donated

3. Name, Address, and PAN of the benefactor of the donation

4. Registration number of the charity

Donations Permitted under Section 80G

As per Section 80G, you can claim deductions under two broad categories:

• Donations without an upper limit: 50% or 100% of the total contribution made can be deducted, according to the charitable institution where donation is made, without any other limitation.

• Donations with an upper limit: 50% or 100% of the total contribution can be tax-deductible, in accordance with the charitable organisation where the money is donated to. You should note that the amount deducted in this type is limited only to 10% of your gross total income.

Here is a look at some charitable organisations where you can contribute to and details about the deduction limit, according to the prevailing tax norms:

Documents Required to Claim Deduction under Section 80G

While filing tax returns, if one wishes to claim income tax deduction under Section 80G, then the following documents need to be submitted alongside your ITR.

1. Stamped Receipt: The donation needs to be authenticated with a stamped receipt from the benefactor organization.

2. Form 58: To claim a 100% tax deduction for your donations at the end of the financial year, remember to download, fill, and submit Form 58. You can download it here.

Key differences between sections 80G, 80GGB, 80GGC

While filing tax returns, people sometimes conflate Section 80G with Section 80GGC or section 80GGB. While all three of these sections have to do with claiming tax deductions for donations made in the previous financial year, they have the following differences:

1. Section 80G is for claiming tax deductions for donations made to charitable organizations and trusts.

2. Section 80GGB is for claiming tax deductions for donations made to political parties by registered Indian companies.

3. Section 80GGC is for claiming tax deductions for donations made to political parties by other categories of taxpayers such as individuals, HUFs, etc.

Conclusion

Section 80G is an effective and easy way to get tax deductions. However, if one is looking to get additional tax deductions, they can do so by opting for Bajaj Allianz Health Insurance on Bajaj Markets. The health insurance plan on Bajaj Markets qualifies for tax deductions under Section 80D of the Income Tax Act. Other than offering the benefit of tax savings, this insurance plan protects you and your family in times of medical emergencies by offering a host of perks such as a sum assured of up to ₹50 lakh, coverage for pre and post hospitalisation expenses, free health check-ups after 3 years, coverage for alternative treatments, and much more. Minimise your tax outgo while protecting the medical and financial health of your loved ones.