Extending its full support to charitable services, the government allows individuals to claim tax deductions on donations made to eligible charitable organisations under Section 80G of the Income Tax Act. However, taxpayers should be aware that all non-government organisations (NGOs) or charitable institutions do not qualify as providing donors with a deduction under Section 80G.
Live TV
“Only those organisations approved by the Commissioner of Income Tax (Exemptions) for receipt of donations and issuance of 80G certificates can do so," Mint quoted Suresh Surana, founder of RSM India, as saying.
What is Section 80G?
Under Section 80G, a taxpayer — individual, companies or firms — can claim income tax deduction for contributions made to certain relief funds and charitable institutions. Those who have opted for the new tax regime cannot avail this deduction. Contributions made through cheque, draft, or cash are eligible for this deduction. Other contributions in the form of food, material, clothes or medicines do not qualify for tax deduction under Section 80G.
What is Section 80GGA?
Section 80GGA is a subsection under Section 80G, which exempts money donated towards scientific research or rural development. Any contribution by the taxpayer towards the National Urban Poverty Eradication Fund set up by the government is also exempt from taxes. Deduction under Section 80G is allowed to all assessees except those who have suffered an income (or loss) from a business or profession.
Amendment to Section 80G
The government introduced an amendment to Section 80G in financial year 2017-18, under which donations made in cash above Rs 2,000 are no longer allowed as a deduction. For donations above Rs 2,000, taxpayers will have to make contribution in other modes apart from cash to qualify under Section 80G. Prior to the amendment, the limit of cash donation was Rs 10,000.
Eligible donation amount
As per Section 80G, donations are eligible for a 100 percent or 50 percent deduction with or without restriction.
Donations eligible for deduction
Donations made to organisations such as the National Defence Fund, Prime Minister’s National Relief Fund, National Foundation for Communal Harmony, approved universities or educational institutions of national eminence, a zila saksharta samiti, state government medical relief to the poor, the National Illness Assistance Fund, the National Sports Fund, National Cultural Fund, and the National Children’s Fund are eligible for 100 percent deduction.
Donations made to the Jawaharlal Nehru Memorial Fund, the Prime Minister’s Drought Relief Fund, the Indira Gandhi Memorial Trust or the Rajiv Gandhi Foundation are eligible for 50 percent deduction without qualifying limit.
Donations allowed under Section 80GGA
A donation made to a scientific research association or a college, university, or any other institution approved by the prescribed authority under Section 35(1)(ii) is eligible for deduction.
Other deductions allowed under this section include amounts paid to approved associations or institutions which undertake programmes of rural development, institutions associated with training people for implementing programmes of rural development and amount paid to a public sector company, local authority or an approved association or institution that carries out such projects.
