Introduction: Section 80G and 80GGA

Each individual having a stable income is required to pay taxes and it is one of the dreams of taxpayers they are exempted to pay such an amount. Sadly, that’s not an option. The Government of India has introduced ample provisions of how can tax be saved and schemes benefitting taxpayers. One such sector where individuals have relief is when they decide to forward their proceeds to charity. Individuals doing their part for the people are provided with the benefit of tax deductions that are encouraged and backed by the Government of India.

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The Legislation that provides for tax regulations in India, i.e. the Income Tax Act, 1961 includes Section 80G and 80GGA which were added in order to claim benefits upon the contributions/donations made to a charitable trust. The legislation further also lays down a detailed list of donations that may or not be considered to obtain such deductions under 80G and 80GGA. This blog shall certain those conditions where only prescribed donations can be used to register into these forms.

What is Section 80G?

Section 80G of the Income Tax Act, of 1961 lays down the provision that allows a taxpayer to claim deductions for various charitable contributions. Contributions to specified relief funds and charitable institutions are eligible for the deduction under the Act. Not all charitable contributions are deductible under Section 80G. Only contributions to the specified funds are deductible. To encourage people to donate, the Government of India implemented Section 80G deduction. By lowering income taxes, the Government hopes to encourage people to donate more to worthy causes.

How Can Benefits Be Claimed Under 80G? 

A donation benefit under Section 80G can be availed upon the condition that such donation is made through cheque, cash, or DD. Contributing to donations, any other material such as food, clothes, utensils, medicines, etc. cannot be claimed under Section 60G of the Act. Through an amendment passed in 2018, the Government of India now does not allow a donation above 2,000 (Two thousand) rupees in cash to reduce tax liability under 80G. 

How The Amount Is Deducted Under 80G?

Certain conditions apply to donations made to eligible trusts and charities that qualify for tax deductions. Section 80G donations are broadly classified into four categories-

Donations that are 100% Deducted without any Qualifying Limit

The list of donations that fall under this category are-

• National Defence Fund introduced by the Central Government
• Prime Minister’s National Relief Fund
• National Foundation for Communal Harmony
• An approved university/educational institution of National eminence
• Zila Saksharta Samiti is constituted in any district under the chairmanship of the Collector of a District in order to facilitate education in villages
• Fund set up by a state government for medical relief to the poor
• National Illness Assistance Fund
• National Blood Transfusion Council or any State Blood Transfusion Council
• National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities
• National Sports Fund
• National Cultural Fund
• Fund for Technology Development and Application
• National Children’s Fund
• The Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund concerning any State or Union Territory
• The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
• The Maharashtra Chief Minister’s Relief Fund during October 1, 1993, and October 6, 1993
• Chief Minister’s Earthquake Relief Fund for the State of Maharashtra
• Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of the earthquake in Gujarat
• Any trust, institution, or fund to which Section 80G(5C) applies for providing relief to the victims of the earthquake in Gujarat. Such contribution shall be made between January 26, 2001, and September 30, 2001.
• Prime Minister’s Armenia Earthquake Relief Fund
• Africa- India Public Contributions Fund
• Swachh Bharat Kosh 
• Clean Ganga Fund 
• National Fund for Control of Drug Abuse 

Donations that are 50% Deducted without a Qualifying Limit

• Jawaharlal Nehru Memorial Fund
• Prime Minister’s Drought Relief Fund
• Indira Gandhi Memorial Trust
• Rajiv Gandhi Foundation

Donations that are 100% Deducted with a certain Qualifying Limit

Donations are subject to a 10% adjustment on the total gross salary of an individual. The trusts that are considered eligible are as follows-

• Donations made to the Government or any approved local authority, institution, or association to be utilized to promote family planning.
• Donation by a company to the Indian Olympic Association or any other notified association or institution established in India to develop infrastructure for sports and games in India or sponsor sports and games in India.

Donations that are 50% Deducted with a certain Qualifying Limit

Donations made under this category are subject to a 10% adjustment of a person’s total gross income. Kinds of charity included under this category are as follows-

• Any fund or institution that fulfills the conditions mentioned under Section 80G (5) of the Act.
• To be used for any charitable purpose other than promoting family planning by the Government or any local authority.
• Any authority established in India to deal with and meet the need for housing accommodation, or to plan, develop, or improve cities, towns, villages, or both.
• Any corporation referred to in Section 10(26BB) for the purpose of promoting minority community interests.
• Repairs or renovations to any notified temple, mosque, gurudwara, church, or other location.

What Sre The Documents required to claim 80G?

•  A stamped receipt is required for claiming deduction under section 80G. The receipt has to be mandatorily issued by the recipient trust. The receipt should comprise of-

1. Name, address & PAN number of the trust to which a donation was made.
2. The amount donated should be mentioned in numeric as well as in words.
3. Donations that can attract 100% deduction – in such case form 58 from the trust should also be asked for

• Form 58 comprises the details of the amount that was authorized as well as the amount that was collected. Without presenting form 58, the deductions made for 100% of claims will be rejected.
• Registration number of the trust under 80G
• The validity of registration should be valid as of the date the receipt is issued.
• Photocopy of the 80G certificate is attached along with the receipt.

What is the Process to Register under Section 80G?

The Commissioner of Income Tax will process registration under this section after receiving an application in Form 10G from the applicant. The following documents should be submitted with the application:

• MOA /Trust Deed
• NOC from the proprietor of the land where the registered office is situated.
• Pan Card of the Trust.
• Documents of Water, electricity along with the tax receipt
• Proof of Charitable Activities performed
• A report of the progress of the organization along with its three-year record
• A list of its accounts and statistics.
• Contributors' names, addresses, and PANs are listed.
• Trustees' the Governing body list with contact information.
• Copies of registrations granted under Section 12A or notifications issued under Sections 10(23) or 10 (23C).

What Is The Procedure To Claim Deductions Under 80G?

The following information must be included in the Income Tax Return in order to be eligible to claim this deduction:

• The Donee's name
• The Donee's PAN
• Location of the Donee
• Amount of Contribution - A breakdown of Cash Contributions and Other Contributions
• The sum of money that can be deducted

What is Section 80GGA? 

Similar to the concept of Section 80G of the Income Tax Act, 1961 Section 80GGA, lays down deductions on those contributions that are specifically made towards any Scientific Research or the development of a Rural area. This section was created to provide incentives to individuals who donate to worthy causes, thereby saving money and increasing the idea of donating in India.

Many institutions involved in scientific research and rural development depend on charitable contributions made by individuals, and Section 80GGA serves as a lifeline for them, actively encouraging donors to make a contribution to the country's advancement and growth.

What Donations Are Eligible Under Section 80GGA?

• Any sum paid to a research association that conducts scientific research, or any sum paid to a college, university, or other institution to be used for scientific research, as long as it is approved by the relevant authority under Section 35(1)(ii).
• A sum paid to a research association that conducts social science or statistical research, or a sum paid to a college, university, or any other institution for the same purpose, all of which must be approved by the prescribed authority under Section 35(1). (iii)
• Amount paid to an approved association or institution that undertakes any rural development program and is approved under Section 35CCA.
• Amount paid to an approved association or institution that trains people to carry out rural development programs.
• Amount paid to a public sector company, a local authority, or an approved association or institution for the implementation of projects or schemes approved under Section 35AC.
• Amount paid to the Rural Development Fund
• Amount paid to the notified Afforestation Fund
• Amount paid to the National Poverty Eradication Fund

How Are Deductions Calculated Under 80GGA?

Donations made under Section 80GGA qualify for a full and 100% tax deduction. There is no maximum amount that can be donated to institutes that follow the principles outlined in this Section, and donations can be made in cash, check, or draft. Cash donations, on the other hand, have a maximum limit of Rs 10,000, with amounts greater than this not permitted. However, the following is kept in consideration while an individual avail the benefits under Section 80GGA-

• Individuals can make a tax-deductible contribution to a registered university, college, or organization engaged in scientific research or rural development.
• A cash donation deduction of up to rupees 2,000 will be provided a deduction and not above that. 

What Are The Documents Required Under 80GGA?

• Individuals must submit a cash receipt or a cheque receipt to prove their donation.
• The income tax department must authorize the registration number on this receipt.
• To be eligible for an 80GGA tax deduction, individuals must submit a stamped receipt issued by an authorized trust. This receipt must include the donor's name, donation amount, address, and trust name, among other information.

General Rules Regarding Deductions Under 80G And 80GGA

• An individual cannot avail of benefits under the Sections if any contribution is made to any Foreign Charitable Trust. 
• The Income Tax Department assigns a registration number to trusts and institutions registered under Section 80G, and donors should ensure that this number appears on their receipt.
• Individuals, partnership firms, HUFs, corporations, and other types of taxpayers can claim Section 80G deductions regardless of the type of income earned.
• The registration number must be current on the date of the donation. If the donation is made while the Section 80G registration is inactive, the donation will not be deductible.
• Proof of eligible donations shall be presented before claiming benefits under the Section.
• If a deduction under Section 80GGA is allowed, such expenses are not deductible under any other provision of the Income Tax Act.
• This deduction is available to all taxpayers except those with earnings or loss from a profession or a business.
• Before donating money, one should check to see if the institute is registered and follows the rules as institutes can lose their affiliations or approval at any time. 

Conclusion

Most of us have made a charitable contribution at some point in our lives. It’s a humbling feeling to contribute to a cause that we believe will bring about change. Our government extends its support to its citizens to recognize such a noble work. To further aid the gesture of donating, charitable contributions made to a trust are covered by Sections 80G and 80GGA of the IT Act. Under this Act, a citizen can claim a tax deduction for a variety of charitable transactions.