Comprehensive Guide to Section 80G and 80GGA Tax Deductions on Donations

Donating to charitable organizations not only contributes to societal welfare but also provides significant tax benefits under the Indian Income Tax Act. Sections 80G and 80GGA specifically enable taxpayers to claim deductions for contributions made to eligible funds and institutions. Here, we explore the nuances of these provisions, ensuring clarity on eligibility, modes of payment, and procedural requirements.

Understanding Section 80G

Section 80G allows taxpayers to claim deductions on donations made to specific relief funds and charitable institutions. This benefit is available to individuals, companies, Hindu Undivided Families (HUFs), firms, Non-Resident Indians (NRIs), and others. However, deductions under Section 80G are not applicable if taxpayers opt for the new tax regime under Section 115BAC.

Eligibility Criteria

To claim deductions under Section 80G, donations must be made to prescribed funds or institutions. Contributions made in kind, such as food, clothing, or medicines, are not eligible. Additionally, cash donations exceeding Rs. 2,000 do not qualify for deductions. Only contributions made via cheque, demand draft, or electronic transfer are considered valid.

Claiming the Deduction

To claim the deduction, taxpayers need to provide specific details in their Income Tax Return (ITR), including:

• Name and address of the donee
• PAN of the donee
• Amount of donation (segregated by cash and other modes)
• Amount eligible for deduction

Deductions are categorized into four tables in the ITR:

1. Table A: 100% deduction without qualifying limit
2. Table B: 50% deduction without qualifying limit
3. Table C: 100% deduction subject to qualifying limit
4. Table D: 50% deduction subject to qualifying limit

Donations Eligible for Deduction

Donations under Section 80G are classified into different categories based on the deduction percentage and limits:

100% Deduction Without Qualifying Limit

• National Defence Fund
• Prime Minister’s National Relief Fund
• National Sports Fund
• Swachh Bharat Kosh (from FY 2014-15)
• Clean Ganga Fund (from FY 2014-15)
• National Children’s Fund, among others.

50% Deduction Without Qualifying Limit

• Prime Minister’s Drought Relief Fund

100% Deduction Subject to 10% of Adjusted Gross Total Income

• Donations to promote family planning
• Contributions to the Indian Olympic Association for sports infrastructure

50% Deduction Subject to 10% of Adjusted Gross Total Income

• Donations for charitable purposes by local authorities or approved institutions
• Contributions for the renovation of religious places

Section 80GGA: Promoting Scientific Research and Rural Development

Section 80GGA provides deductions for donations directed toward scientific research or rural development. This provision is applicable to all taxpayers except those earning income from business or profession. Similar to Section 80G, this deduction is unavailable under the new tax regime (115BAC).

Eligible Donations

• Contributions to research associations or institutions approved under Section 35(1)(ii) or (iii) for scientific or social research.
• Payments to approved rural development associations or funds like the National Poverty Eradication Fund.

Payment Modes

Donations must be made via cheque, draft, or electronic transfer. Cash donations above Rs. 2,000 are ineligible for deductions.

Adjusted Total Income and Its Relevance

Adjusted gross total income is calculated by reducing the aggregate of deductions under Sections 80C to 80U (excluding 80G), exempt income, and certain capital gains from the gross total income. This calculation determines the maximum eligible deduction for donations subject to limits.

Practical Example of Tax Savings

Consider an individual, Mr. S, and a company, M/s. P Pvt. Ltd., each donating Rs. 1,60,000 to an NGO. With a total income of Rs. 7,00,000 for the Assessment Year 2025-26, their deductions and tax savings are computed as follows:

Required Documentation

To claim deductions under Sections 80G and 80GGA, taxpayers must retain the following:

• Stamped receipt: Issued by the donee institution, mentioning the donor’s name, address, donation amount, and institution’s PAN.
• Trust registration number: Provided by the Income Tax Department to eligible institutions.

Conclusion

Sections 80G and 80GGA encourage taxpayers to support social causes by offering attractive tax benefits. By understanding the eligibility criteria, payment modes, and documentation requirements, individuals and organizations can maximize their tax savings while contributing to nation-building efforts. Always consult with a tax expert to ensure accurate claims and compliance with current regulations.