Understanding Taxes

Tax Deduction under Section 80G for Donations towards Social Causes

image Have you donated money for charity, social or philanthropic purposes, or, have made contributions towards a National Relief Fund? If yes, then you could use these donations to reduce your tax outgo. The Income Tax Act encourages charitable deeds towards the poor and needy, and offers donors tax benefits under Section 80G. Read on to find out more about this section.

 

Understanding Section 80G

Section 80G offers a tax deduction for donations to certain prescribed funds and charitable institutions. Here are the details of the section.

 

Eligible Assesses

This section is applicable to all assessees, who make an eligible donation, whether an individual, HUF, NRI or a company.

 

Deduction Limit

The extent of deduction is either 50% or 100% of the contribution, depending on the charitable institution donated to.

  

For certain funds, the aggregate deduction is limited to 10% of the “Adjusted Gross Total Income”. So, in such cases, even if you do make a donation larger than 10% of your Adjusted Gross Total Income, the donation amount eligible for claiming a deduction would be capped at 10% of the Adjusted Gross Total Income.

 

The Adjusted Gross Total in this case, is the gross total income minus long-term capital gain, short term capital gain and all deductions u/s 80CCC to 80U except any deduction under this section.

 

Scope of Deduction

  • The donation may be paid either out of taxable or exempted income.
  • Only donations made in cash or cheque are eligible for deductions. Donations made in kind, in the form of food, clothing, medicines etc are not eligible.
  • Donations to foreign charitable trusts are not eligible for any deduction.
  • Political parties (BJP,CPI,Congress,CPM,BSP,SP) are eligible for 100% deduction.
  • For donations made to Indian Olympic Association, any association notified u/s 10(23) for development of infrastructure for sports or games, or for sponsorship of sports or games, only a company is eligible for deduction.
  • Donations made to not all charitable institutions qualify for a deduction. Here is a list of approved charitable institutions and funds that qualify for a deduction.

 

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Donations with 100% deduction without any qualifying limit:

  1. Prime Minister’s National Relief Fund
  2. National Defence Fund
  3. Prime Minister’s Armenia Earthquake Relief Fund
  4. The Africa (Public Contribution - India) Fund
  5. The National Foundation for Communal Harmony
  6. Approved university or educational institution of national eminence
  7. The Chief Minister’s Earthquake Relief Fund, Maharashtra
  8. Donations made to Zila Saksharta Samitis.
  9. The National Blood Transfusion Council or a State Blood Transfusion Council.
  10. The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air Force Central Welfare Fund.
  11. Army Central Welfare Fund, Indian Naval Ben. Fund, Air Force Central Welfare Fund.
  12. National Illness Assistance Fund
  13. Chief Minister's or Lt. Governor's Relief Fund
  14. National Sports Fund
  15. National Cultural Fund
  16. Govt./ local authority/ institution/ association towards promoting family planning
  17. Central Govt.'s Fund for Technology Development & Application
  18. National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation & Multiple Disabilities
  19. Indian Olympic Association/ other such notified association
  20. Andhra Pradesh Chief Minister's Cyclone Relied Fund

             

Donations with 50% deduction without any qualifying limit.

  1. Jawaharlal Nehru Memorial Fund
  2. Prime Minister’s Drought Relief Fund
  3. National Children’s Fund
  4. Indira Gandhi Memorial Trust
  5. The Rajiv Gandhi Foundation
  6. Donations to govt./ local authority for charitable purposes (excluding family planning)
  7. Authority/ corporation having income exempt under erstwhile section or u/s 10(26BB)
  8. Donations for repair/ renovation of notified places of worship
  9. World Vision India
  10. Udavum Karangal

       

Donations to the following are eligible for 100% deduction subject to 10% of adjusted gross total income

  1. Donations to the Government or a local authority for the purpose of promoting family planning.
  2. Sums paid by a company to Indian Olympic Association

      

Donations to the following are eligible for 50% deduction subject to 10% of adjusted gross total income

  1. Donation to the Government or any local authority to be utilized by them for any charitable purposes other than the purpose of promoting family planning.

       

The Donation Receipt

In order to claim deduction, it is mandatory for the donor to furnish a proof of payment towards the eligible fund or institution. A stamped receipt is issued by the recipient trust in this regard, which must be attached by the assessee along with the income tax returns.

The receipt must include the following details.

  • Name and address of the trust
  • The name of the donor
  • The amount donated, mentioned in words and figures
  • The registration number of the trust, as given by the income tax department under section 80G, along with its validity period.

Tax benefits cannot be claimed without the above mentioned details and document.

          

Donations deducted from Salary

Where employees have contributed towards eligible charitable causes from their salaries and the donation receipt is on the employer’s name, a deduction under section 80G could still be claimed. In such cases, the employer would need to issue a certificate mentioning that the contribution was made from the employee’s salary account.

 

There are many trusts in India engaged in charitable activities. In order to ensure that only contributions to genuine trusts entail a tax benefit, the government has brought in registration of trusts. Thus, before you donate, check to see, if the trust you are donating to is registered and has the tax exemption certificate, which is popularly known as the 80G certificate.

Note: Donation in cash is acceptable only up to Rs. 10,000 for being eligible for deduction under section 80G.

   

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Written by Ramya Ramachandran

         

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Comments

Comments

 

raghu said:

can the donation paid by any employee u/s 80GG be deducted from the salary income by the employer for TDS purposes?

March 18, 2011 1:28 AM
 

raghu said:

can the donations paid by any employee u/s 80G be deducted by the employer from the salary income for tax deduction purposes?

March 18, 2011 1:30 AM
 

Shantanu said:

Please confirm if affixing revenue stamp on the donation receipt is mandatory?

July 5, 2011 2:54 AM
 

rkagarwal said:

Dear Sir,

Can we get an exemption after donating the money to a reputed temple which is not registered with income tax dept.

regards

July 12, 2011 6:20 AM
 

rajnish said:

awesome page . uncountable number of thanks to the creator

July 15, 2011 5:11 AM
 

leena said:

Dear Sir,

Pls let me know if employer or owner of the co. is giving donation & receipt is in the name of employer's family member, in that case can employer get claim u/s 80 G. Pls Advice.

Regards

July 23, 2011 2:38 AM
 

Adarsh said:

Here Short term capital gain is 111A

July 25, 2011 6:37 AM
 

subash said:

yes, to claim exemption under section 80GG, but employee should not receive any house rent allowance.

July 27, 2011 2:33 AM
 

Sai said:

Sir,

Every month I donate some amount (Rs 1,000) to a local charitable trust in my home town. Please let me know the set up procedure for the charity trust people to  give 80G certificate.

July 31, 2011 12:30 AM
 

subasha chandra panda said:

Is section  80G  is after the one lakh limit or it comes under that only

September 14, 2011 6:36 AM

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