Section 80G of the Income Tax Act

The charitable organisations contribute towards the welfare of the less fortunate and needy sections of the society. In order to help them fulfil their aspirations and work towards the growth and development of our society, the government provides tax deductions to citizens if they donate to these charitable organisations. Section 80G of the Income Tax Act, 1961, was introduced to cater to this goal. Read on to know more about the section and all its dimensions. 

What is Section 80G of the Income Tax Act?

According to Section 80G of the Income Tax Act, 1961, you can claim a tax deduction on the charitable donations or contributions made within the given fiscal year when you file your income tax return (ITR). This means that you fall in a lesser tax bracket and hence, your tax liabilities will be mitigated. One of the unique features of Section 80G is that there is no maximum limitation on the amount of your tax-deductible donation when you file an ITR for a specific number of charities. 

Terms and Conditions for Deductions Under Section 80G

There are a few terms and conditions you must meet for claiming the tax deductions u/s 80G of the Income Tax Act. Three of them are as follows:

1. You cannot claim the tax deductions for contributions over Rs. 2000 made in cash. These changes have been put in place by the 2017’s budget.

2. If the contributions are made in kind, they are not eligible for tax deductions under this section.

3. If the contributions are made to the trusts which are registered outside India, they are not eligible for tax deductions under this section.

Deduction Under Section 80G

Section 80G of the Income Tax Act majorly deals with the contributions which are made towards charitable trusts or institutions registered under the government of India. The main objective of this particular section is to give tax incentives to the individuals who are indulged in philanthropy.

Besides, this section allows tax deductions on contributions or donations made to specific funds or charitable organisations only. If an individual donates an amount to an eligible trust or charitable organisation, a tax deduction can be claimed by them on their donation when they file for an income tax return (ITR). This is one of the best tax-saving instruments wherein you can even contribute your bit towards the betterment of the society.

Mode of Payment to Avail Section 80G

The deductions which are applicable u/s 80G of the IT Act can be claimed only when the donations or the contributions are made via a draft, cash, or cheque. If the donation is made in kind, you will not be eligible to claim deduction under this section. Cash donations above Rs. 2000 are not included in the deduction calculation u/s 80G. Hence, in order to claim this deduction, you must donate an amount more than Rs. 2000. 

Eligibility Criteria

If you wish to claim tax deductions under Section 80G of the IT Act, you must meet the below mentioned eligibility criteria:

• You must be an Individual or an HUF

• Non-residents of India who contribute to the applicable trusts

• You must produce the relevant proofs of your donations

• You must have made the donation to the charitable organisation from your taxable income. Donations made from the non-taxable income will not be deductible.

Claiming Section 80G Tax Deductions

If you wish to claim deductions under Section 80G of the IT Act, you must produce a proof of the donations you make to the charitable organisations as it is of paramount importance. You must ensure that you collect a receipt of your donations from the charity that you donated to if you want to get a successful tax rebate. Please note that the receipt must contain the below mentioned details:

Name of the donor, amount that was donated, name, address, and PAN of the benefactor of the donation, and registration number of the charitable organisation.

Deductions under Section 80G

According to Section 80G of the IT Act, deductions for donations can be claimed under the below mentioned categories:

• Donations with no upper limit: 50% or 100% of the total contribution made is deductible, as per the charitable organisations where the contribution is made, with no other limitation.

• Donations with an upper limit: 50% or 100% of the total contribution can be deducted, as per the charitable institution where the amount is donated. You must note that the deducted amount in this type is limited to only 10% of your gross total income.

Let’s look at the below mentioned table at few of the charitable organisations where you can contribute or donate and details about the deduction limitations, as per the prevailing tax norms:

Documents Needed to Claim Tax Deduction U/S 80G

Below mentioned documents must be submitted along with your income tax return if you wish to claim income tax deductions under Section 80G:

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

• 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. 

Differences Among 80G, 80GGB, 80GGC

While filing the income tax returns, you may conflate Section 80G with 80GGC or GGB. Although these three sections are associated with tax deductions for donations or contributions made in the previous financial year, they still differ in certain respects. Section 80G is associated with tax deductions for donations or contributions made to the charitable organisations or trusts. Section 80GGB, on the other hand, is associated with tax deductions for donations made to the political parties or electoral trusts by registered Indian corporations. Section 80GGC is for claiming tax deductions for donations made to political parties by other categories of taxpayers such as individuals, HUFs, etc.

List of Donations Eligible u/s Section 80G

Below mentioned is a list of donations which are eligible for tax deductions under sections 80G:

• Prime Minister's National Relief Fund

• National Illness Assistance Fund

• Relief Fund of the Chief Minister or the Lieutenant Governor  with respect to any Union Territory or State.

• National Sports Fund

• National Trust for Welfare of Persons with Autism, Mental Retardation, Cerebral Palsy, and several disabilities

• National Foundation for Communal Harmony

• An approved university/educational institution of National eminence

• The Indian Naval Benevolent orAir Force Central Welfare or Army Central Welfare Fund, the Cyclone Relief Fund of the Andhra Pradesh Chief Minister in 1996

• Africa (Public Contributions - India) Fund

• Any trust, fund or institution to which Section 80G(5C) applies for providing the victims of the earthquake in Gujarat with relief (contribution was made during 16 January, and 30 September 2001)

• The Maharashtra Chief Minister's Relief Fund during October 1, 1993 and October 6, 1993

• Chief Minister's Earthquake Relief Fund, Maharashtra

• Swachh Bharat Kosh - this has been effective from the financial year 2014-2015

• Fund for Technology Development and Application

• Any fund that the State Government of Gujarat sets up primarily for the provision of relief to the victims affected by the earthquake in Gujarat

• National Children's Fund

Process for Claiming Deduction u/s Section 80G

When you file your ITR, you must provide the below mentioned details:

• Name of the donee

• PAN of the donee

• Address of the donee

• Deducted amount

• Contributed amount

These details are required to be entered in Table, A, B, C, or D.

Conclusion

Section 80G of the Income Tax Act, 1961, is a very effective method to claim deductions on tax, thereby acting as a very useful tax-saving instrument. Contribute towards the growth and development of the society and claim your tax deductions on such contributions.