Section 80G of Income Tax Act, 1961 in context to Budget 2021

What is Section 80G of Income Tax Act, 1961?

Under this section, any contributions made to specified relief funds and charitable institutions shall be claimed as deduction within this section. However, all the donations are not eligible for deduction. Except, in the case of above mentioned contributions or donations shall qualify for a deduction. The said deduction can be claimed by any taxpayer, individuals, company, firm or any other person.

In some cases, deductions are not eligible for donation purposes by the Income Tax Department as there is a specified category on which deductions can be availed.

Payment Criteria

The deduction can be claimed where the contribution is made through cheque, draft or in cash. The contribution or donation made of more than Rs 10,000 in cash shall not subject to deduction. Any contribution made after 2017-18, in cash exceeding Rs. 2000 shall not be permitted as deduction. Therefore, donations shall be made by other mode to avail deduction and donations that are specified under section 80G of Income Tax Act, 1961 will qualify for the deduction of up to either 100% or 50% as the case may be.

Let’s have a look at the donations eligible for 100% deduction

The following Organization shall qualify for 100% deduction:

  • National Funds for Sports
  • Defense fund set up by the Government
  • Foundation for Communal Harmony
  • National Illness Assistance Fund
  • Cultural Fund
  • Chief Minister’s Relief Fund of State or Union Territory
  • National Disaster Fund (Earthquake) in Gujarat
  • National fund for control of drug abuse
  • The trust, institution falling under section 80G of Income Tax Act, 1961 providing relief for victims of the earthquake in Gujarat.  
  • Ganga Fund

What types of donations are subject to 50% deductions?

  • Prime Minister’s Drought relief fund
  • Memorial Trust of Indira Gandhi
  • Rajiv Gandhi Foundation
  • Jawaharlal Nehru Memorial Fund

What are the document required for the deduction?

The income tax return shall contain the following details to claim deduction such as:

  • Name and address of the Donee
  • PAN of the Donee
  • Amount of Contribution

What kinds of Donations are eligible for 100% deduction with 10% of gross income?

  • When any donations are made to the government or any recognized local authority, institution or association to be used for the purpose of promoting family-related planning or initiative.
  • When the donation is made by a Company to the Indian Olympic Association or any other recognized institution for the development of infrastructure for sports and games in India.

Let’s also read about Section 80GGA of Income Tax Act, 1961

This section states about the deductions for donation or contribution made in reference to scientific research or rural development. The above deduction is permissible to all assesses except on those who have an income from business or a profession.

The mode of payment shall be made in the form of a Cheque or draft or in cash. Any donation made in excess of Rs. 10000 shall not be liable for deductions. The entire amount that is donated or contributed is eligible for deductions.

What are the donations eligible under Section 80GGA?

  • Under this, any sum paid to a research institute, college, university, or any other institute that is used as scientific research that is approved by the concerned authority under Section 35 (1) about scientific research expenditure
  • An amount paid to a research association in which research is conducted in the field of social science or statistical research allowed by the concerned authority.
  • The amount paid to the approved association or institution that undertake any program of rural development
  • The amount paid to the public sector company, local authority, and approved association or institution
  • Amount paid to the National Rural Development fund or National Poverty Eradication Fund.
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