For security reasons, your session has been timed out. To continue, Please login.
It is that time of the year when you’re looking for ways to save on as much tax as possible. You have already taken full advantage of the deduction under section 80C, bought a health insurance and are looking for other deductions available under the Income Tax Act, 1961 to save tax.
Another way you can save tax while doing some good work is by using the deductions available under Section 80G of this Act. Section 80G of the I-T Act allows donations made to specified relief funds and charitable institutions as a deduction from gross total income before arriving at taxable income.
Sub Sections of Section 80G
There are some sub-sections:
Section 80GGA: Under Section 80GGA any donation made to entities in scientific research or rural development are applicable for 100% tax deduction, provided it is donated by tax payers with no business income.
Section 80GGC: Section 80GGC allows for 100 per cent tax deduction towards contribution to a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951) or an electoral trust.
Conditions while making donations
If you are planning to donate for a cause with a hope of claiming tax deduction, keep these points in mind. Only those donations made in cash or cheque are eligible for tax deduction. This means, if you are offering a helping hand by any other means like clothes, medicine, utensils, food, etc, you are not eligible to claim for the expenses incurred for the same. Donations made to foreign charitable trusts are not eligible for any tax deduction. Donations made for political parties against their miscellaneous expenses like brochures, souvenirs or pamphlets cannot be claimed.
You will need the following documents to avail deduction under section 80G of Income Tax Act, 1961.
2. Form 58:
3.Photocopy of the 80G certificate:
Who can avail the benefit?
Deduction under this section is not restricted to any specific category of persons/ assessees. This deduction can be availed by any assessee who makes a donation to the notified institutions and the relief funds set up by the government.
However, one must remember that any donation made to foreign trusts and political parties do not qualify for deduction under this section. Any donation to political parties made by an Individual can be claimed as a deduction under the section 80GGC of the I-T Act.
A. Donations which qualify for 100% deduction without any upper limit:
B. Donations which qualify for 50% deduction without any upper limit
C. Donations which qualify for 100% deduction subject to 10% of adjusted gross total income:
D. Donations to the following institutions are eligible for 50% deduction subject to 10% of adjusted gross total income:
A deduction can be claimed under section 80G only when the contribution is made to specified funds and institutions either via cheque or cash.
Effective from the assessment year 2018-19, a person can avail a maximum deduction of Rs 2,000 if the donation is made in cash. However, there is no maximum limit on the deduction amount if the payment is made via cheque or digital payment methods.
Earlier, the maximum limit allowed for donation in cash was Rs 10,000, but the Union Budget of 2017 reduced this to Rs 2,000 in order to curb tax filers from misusing this section by submitting fake donation receipts.
Please note that any donation made in kind such as in the form of clothes, food rations etc. cannot be claimed as deductions under this section.
Some donations qualify for either 50% or 100% tax deduction whereas some others qualify for the same deduction but up to a maximum limit of 10% of Adjusted Gross Total Income of the taxpayer. So, broadly they can be divided into 4 categories. It can be understood with the help of following illustration:
Donation made to some institutions is eligible for deduction without any upper limit while there are some others where the maximum amount of deduction is limited as per the prescribed provisions.