Donations u/s 80G — Explained

This document covers

1. Persons eligible to claim deductions u/s 80G
2. Which Regime allows the deductions u/s 80G
3. Mode of Donation
4. Amount of Deduction
5. Qualifying Limit
6. Funds or institutions to which donations can be made u/s 80G
   1. Donations qualifying for 100% deduction without any qualifying limit
   2. Donations qualifying for 50% deduction without any qualifying limit
   3. Donations qualifying for 100% deduction subject to qualifying limit
   4. Donations qualifying for 50% deduction subject to qualifying limit
7. Filing of Statement for the donation received by the institution or Fund
8. Donations to Political Parties
9. What Is Political Party?
10. What are contributions?
11. Section 80GGB — Donations or contributions given by companies to political parties
12. Section 80GGC — Donations or contributions given by any other person to political parties.

1. Persons eligible to claim deductions u/s 80G

The following persons can claim deduction towards donations made u/s 80G.

• Individual
• HUF
• Association of Persons (AOP)
• Body of Individuals (BOI)
• Artificial Judicial Person (AJP)
• Companies
• Firm’s/LLP

Note: The deduction u/s 80G can be claimed whether it has any connection with the business of the taxpayer or not.

2. Which Regime allows the deductions u/s 80G

• The taxpayers who want to claim deduction u/s 80G needs to opt for Old Tax Regime.
• The taxpayers who are opting for New Tax Regime cannot claim deduction u/s 80G.

3. Mode of Donation

• The taxpayers can claim the donation only if the donations are made through any other mode except Cash i.e., donation should be made through bank
• Donations in kind is not eligible for deduction u/s 80G
• Donation in cash is allowed only upto Rs 2000.

4. Amount of Deduction

There are 4 categories of deductions. They are as follows

• Donations qualifying for 100% deduction without any qualifying limit.
• Donation qualifying for 50% deduction without any qualifying limit.
• Donations qualifying for 100% deduction subject to qualifying limit.
• Donations qualifying for 50% deduction subject to qualifying limit.

5. Qualifying Limit

Qualifying limit should be limited to 10% of adjusted total income. The qualifying limit should be computed as follows.

• Compute Adjusted Total Income i.e., Gross Total Income should be reduced by the following
  • Deductions u/s Chap VIA except u/s 80G
  • STCG taxable u/s 111A
  • LTCG taxable u/s 112 and 112A
  • Any income on which tax is not payable.
  • Income u/s 115A(1)(a), 115AB, 115AC, 115AD & 115D.
• Calculate 10% of Adjusted total income.
• Calculate the actual donation which is subject to qualifying limit.
• Lower of Step 2 or step 3 is the maximum permissible deduction.
• The said deduction is adjusted first against donations qualifying for 100% deductions and balance 50% qualifies for deduction u/s 80G.

6. Funds or institutions to which donations can be made u/s 80G

A. Donations qualifying for 100% deduction without any qualifying limit

• The National Defence Fund set up by the Central Government.
• The Prime Minister's National Relief Fund or the Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND)
• The Prime Minister's Armenia Earthquake Relief Fund
• The Africa (Public Contributions - India) Fund
• The National Children's Fund
• The National Foundation for Communal Harmony
• Approved University or educational institution of national eminence
• Chief Minister Earthquake Relief Fund, Maharashtra
• Any fund set up by the state Government of Gujarat exclusively for providing relief to the victims of the Gujarat earthquake
• Any Zila Saksharta Samiti for primary education in villages and towns and for literacy and post literacy activities.
• National Blood Transfusion Council or any State Blood Transfusion Council whose sole objective is the control, supervision, regulation or encouragement of operation and requirement of blood banks.
• Any State Government Fund setup to provide medical relief to poor
• The Army central welfare fund or Indian Naval Benevolent fund or Air force central welfare fund established by the armed forces of the union for the welfare of the past and present members of such forces or their dependants.
• The Andhra Pradesh Chief minister’s cyclone relief fund, 1996
• The National Illness Assistance fund
• The Chief Minister’s Relief Fund or Lieutenant Governor’s relief fund in respect of any state or Union territory.
• The National sports fund setup by the Central Government
• The National culture fund setup by the Central Government
• The fund for Technology Development and application set up by the Central Government
• National trust for the welfare of persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities.
• The Swachh Bharath Kosh setup by the Central Government where such assessee is a resident other than the sum spent in pursuance of CSR u/s 135(5) of the companies act 2013.
• The Clean Ganga Fund setup by the Central Government where such assessee is a resident other than the sum spent in pursuance of CSR u/s 135(5) of the companies act 2013.
• The National Fund for control of Drug Abuse constituted u/s 7A of the Narcotic Drugs and Psychotropic Substances Act 1985.

B. Donations qualifying for 50% deduction without any qualifying limit

• Prime Minister Drought Relief Fund
• The Jawaharlal Nehru Memorial Fund (discontinued from FY 2023-24 onwards)
• Indira Gandhi Memorial Trust (discontinued from FY 2023-24 onwards)
• Rajiv Gandhi Foundation (discontinued from FY 2023-24 onwards)

C. Donations qualifying for 100% deduction subject to qualifying limit

• The Government or to any approved local authority, institution or association as approved for promotion of family planning.
• Sum paid by company as a donation to the Indian Olympic association or any other association or institution in India as may be notified by the Government established.
  • For the development of infrastructure for sports or games
  • For sponsorship of sports and games in India

D. Donations qualifying for 50% deduction subject to qualifying limit

• Any institution or Fund established in India for charitable purposes fulfilling prescribed conditions u/s 80G(5)
• The Government or any local authority for utilisation for any charitable purpose other than the purpose of promoting family planning.
• Any authority constituted in India by or under any other law enacted either for the purpose
  • Of dealing with and satisfying the need for housing accommodation
  
  (OR)
  
  
  • Of planning, development or improvement of cities, towns and villages or both
• Any corporation established by the Central Government or any state Government for promoting the interests of the members of a minority community as referred u/s 10(26BB).
• For Renovation or repair of any such temple, mosque, gurdwara, church or other place as notified by the Central Government to be of historic, archaeological or artistic importance or to be a place of public worship of renown throughout any state or states

7. Filing of Statement for the donation received by the institution or Fund

• Above charitable institutions or trusts are required to file Form 10BD with the Income Tax on yearly basis for the donations received.
• The due date to file Form 10BD is 31 st May of the financial year immediately following the financial year in which the donation was received.
• The details to be filled in Form 10BD are Name and address of donor, PAN of donor, amount of donation, date of donation, mode of donation and receipt number.
• If the trust or institution fails to furnish form 10D, they are required to pay a penalty of Rs 200 per day. However the maximum amount of penalty is total donation received.
• Once Form 10BD is filed by the trust or institution, they are required to generate Form 10BE and issue to the Donor.

Note: Form 10BE is mandatory for donor to claim the deduction u/s 80G from FY 2021-22

8. Donations to Political Parties

Generally individual and organisations will give donations to political parties in the ordinary course of business. To encourage the donations to political parties, Income Tax Act 1961 has introduced the tax deductions for the contributions made to political parties.

Donations to political parties are covered by 2 sections under Income Tax Act 1961

• Section 80GGB — Donations or contributions given by companies to political parties
• Section 80GGC — Donations or contributions given by any other person to political parties

9. What Is Political Party?

• It means a political party registered under Section 29A of the Representation of the People Act 1951
• Any association or body of individual citizens of India calling itself a political party has to register under Section 29A of the Representation of the People Act 1951. The political party has to submit an application to the commission within 30 days from the date of formation as per the guidelines prescribed

10. What are contributions?

The contributions made to political parties includes the following

• Any donation, subscription or payment given to a person for carrying on any activity which is likely to effect public support for a political party shall also be deemed to be contribution for a political purpose
• The expenditure incurred directly or indirectly on advertisement in any publication like Souvenir, brochure, tract, pamphlet etc by or on behalf of a political party or for its advantage shall also deemed to be contribution for a political purpose.

11. Section 80GGB – Donations or contributions given by companies to political parties

• Applicability: This section is applicable for the companies who are giving donations to political parties
• Mode of Donation: Donations given in Digital mode is only considered for deduction. Donations given in cash is not allowed
• Donations given to political parties or electoral trust by companies are considered under this section
• Quantum of Deduction: The companies can claim 100% of donations paid to political parties or electoral trust is allowed as deduction u/s 80GGB

Note: Companies opting the taxation u/s 115BAA (Tax rate—22%) and 115BAB (Tax rate—15%) cannot claim the deduction u/s 80GGB

12. Section 80GGC — Donations or contributions given by any other person to political parties.

1. Who can claim deduction u/s 80GGC: The following persons can claim deduction u/s 80GGC
   • Individual
   • HUF
   • AOP (Association of Persons)
   • BOI (Body of Individuals)
   • Co-operative Society
2. Who cannot claim deduction u/s 80GGC: The following persons who are partly or fully funded by Government cannot claim deductions u/s 80GGC
   • Local Authorities
   • AJP (Artificial Judicial Person)
3. Donations given to political parties or electoral trust by any persons as above are considered under this section
4. Mode of Donation: Donations given in Digital mode is only considered for deduction. Donations given in cash is not allowed.
5. Quantum of Deduction: The companies can claim 100% of donations paid to political parties or electoral trust is allowed as deduction u/s 80GGC
6. The taxpayers who are claiming deductions u/s 80GGC are required to provide the following details while filing ITR w.e.f FY 2023-24
   • Date of Donation
   • Amount of Donation in Cash/other mode
   • Transaction Reference Number
   • IFSC Code of your bank branch

Note: Donations to political parties u/s 80GGC can be claimed only if the taxpayers are opting for Old Tax Regime. Deductions cannot be claimed if they are opting for New Tax Regime

Example: Shri Narendra Modi, Hon'ble Prime Minister of India has contributed Rs 2000 as a donation to Bhartiya Janata Party (BJP). As he is a individual, he can claim entire Rs 2000 as deduction u/s 80GGC if he is opting for Old Tax regime while filing his income tax return.