13 Mar 2018

Section 80 G Deductions

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RK & Associates

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Section 80G allows savings in Income Tax in case of contributing a specified amount to Charitable trust notified under IT act.
Deduction under this section is not restricted to any specific category of persons/ assesses. This deduction can be availed by any assessee who makes a donation to the notified institutions and the relief funds set up by the government. 

A deduction can be claimed under section 80G only when the contribution is made to specified funds and institutions either via cheque or cash. 

Effective from the assessment year 2018-19, a person can avail a maximum deduction of Rs 2,000 if the donation is made in cash. However, there is no maximum limit on the deduction amount if the payment is made via cheque or digital payment methods. Earlier, the maximum limit allowed for donation in cash was Rs 10,000, but the Union Budget of 2017 reduced this to Rs 2,000 in order to curb tax filers from misusing this section by submitting fake donation receipts. 
Please note that any donation made in kind such as in the form of clothes, food rations etc. cannot be claimed as deductions under this section. 

The amount of donation which can be claimed as a deduction under section 80G is determined as per certain rules. You can claim either 100% or 50% of the amount donated as a deduction subject to 'With' or 'Without' the upper limit. 
How much of the amount donated can be claimed as deduction and whether with or without upper limit depends on the entity to which you are donating. Therefore, choose the recipient of your charity with care. 

Donation without Upper limit:
When the 'without upper limit' clause is applicable on the donation made to an entity, then the donor can claim either 50% or 100% of the donation amount without any other limitation. 
The Prime Minister's National Relief Fund and the National Defence Fund are some examples of funds set up by the central government on which 'without upper limit' and 100% deduction clauses are applicable. An Individual can claim deduction on 100% of the amount donated. 

Donation with Upper limit:
On the institutions where the 'With upper limit' clause is applicable then deduction can be claimed as either 100% or 50% (whichever is permitted for that specific entity) of 10% of the Gross adjusted income of the individual. 

Gross Adjusted income for this purpose is calculated as Gross Total Income minus (i) all exempted incomes, (ii) long-term capital gains and, (iii) all deductions under section 80C to 80U except for 80G. 
Donations made to the Government or any local authority for the promotion of family planning qualify for claiming deduction of 100% of the 10% of the Gross adjusted income. 
Donation made for any purpose other than the promotion of family planning, to the Government or any local authority, or for repairs or renovation of any notified temple, mosque, gurudwara, church or another religious place qualify for claiming deduction of 50% of the 10% of the Gross adjusted income. 

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