Tax Deductions under Sections 80G–80GGC

Section 80G of the Income Tax Act, 1961 details the tax deductions that can be availed in lieu of donations made to eligible charitable or research organisations. It is notable that not all charitable and research organisations qualify and this section of the Income Tax Act contains a list of such eligible institutions. The complete list of such eligible organisations is available on the Income Tax Department website.

Additionally, tax deduction available under Section 80G can range from 50% to 100% of the donation amount, depending on the type of organisation you're donating to. For instance, donations to government relief funds can get you a 100% tax deduction, while donations made to some NGOs allow you to avail tax deduction of 50% of the donation amount up to 10% of the net taxable income for the applicable financial year and assessment year.

Below are some key features of Section 80G that tax payers should keep in mind:

In order to maintain transparency, electronic payments such as UPI, NEFT, RTGS, or donations made via cheque/demand is currently preferred for availing Section 80G benefit. However, cash donations are also eligible for availing these tax benefits as long as it is limited to Rs. 2,000 in a financial year.

To claim your tax deduction under Section 80G, you'll need a few key documents:

• ● A valid receipt confirming your donation.
• ● Form 58 if you're aiming for a 100% deduction.
• ● The 80G registration number of the organisation to which you've donated.

While these documents need not be submitted with tax authorities at the time of filing your income tax returns, keeping these along with other key income tax documents handy is advisable if you need to respond to an income tax notice at a later date.

Section 80GGA is a subsection of Section 80G that offers tax benefits on donations made to eligible scientific research organizations, institutions/funds that promote rural development, social welfare, etc. Some examples of such institutions include:

• ● College, University or Institute engaged in scientific research approved by an authority covered under Section 35(1)(iii)
• ● National Poverty Eradication Fund
• ● Fund for Afforestation
• ● Rural Development Fund, etc.

Note: The above list is illustrative and not exhaustive.

Section 80GGB and Section 80GGC of the Income Tax Act, 1961 are subsections of Section 80G that specify the tax benefits that can be availed by making donations to political parties or electoral trust. Section 80GGB offers tax deduction benefits to companies that make donations to political parties. On the other hand, Section 80GGC caters to individuals who make similar political contributions.

However, cash donations cannot be used to claim tax deduction benefits under Section 80GGB or 80GGC. This is different from Section 80G where cash donations up to Rs. 2000 in a year are eligible for Section 80G deduction. This can help ensure transparency and improve accountability in political funding, aligning with the broader goals of financial governance.

Below are some key facts to keep in mind if you are planning to claim tax benefits offered under Section 80G or its various subsections:

• ● Verify 80G Eligibility:One common mistake is not checking whether the organisation you are donating to is eligible for Section 80G as per the Income Tax Department. If you donate to an ineligible institution, you cannot avail any tax benefits.
• ● Ensure you get required documents: Documentation like a stamped donation receipt or Form 58 is essential. Failure to do this might lead to significant fine if you are unable to support you claim in reply to an Income Tax Notice or an audit by tax authorities.
• ● Cash donations: The Income Tax Act stipulates that cash donations above Rs. 2,000 are not eligible for deductions under Section 80G. Ensure that you make donations via cheque, demand draft, or electronic modes like NEFT, UPI, bank transfer, etc. to claim your 80G deduction, if you are contributing a higher amount.