Section 80G of Income tax act

Section 80G of Income tax act

Subject: Economy

Section: Fiscal policy

Context:

Centre has granted the Somnath Temple in the State the status of a place of “historic importance and a place of public worship of renown” under the Income Tax Act. This means donations to the temple will get a tax exemption.

Concept:

The Central Board of Direct Taxes (CBDT) has issued a notification under Section 80G of the Income Tax Act, which deals with ‘Deduction in respect of donations to certain funds, charitable institutions, etc.’

Section 80G:

The various donations specified in Section 80G are eligible for a deduction of up to 100% or 50% with or without restriction, as provided in Section 80G. 

This deduction can be claimed by any taxpayer — individuals, companies, firms or any other person — so long as the contribution is made by a cheque, draft, or cash. This means in-kind contributions such as food, material, clothes, medicines, etc., do not qualify for the deduction.

From FY 2017-18, any donation made in cash exceeding ₹2,000 will not be allowed as a deduction. This means that donations above ₹2,000 have to be made only through cheque or digitally.

Deduction under Section 80G is also available for a host of funds, including the National Defence Fund set up by the Central Government, PM CARES, the Prime Minister’s Drought Relief Fund, the Prime Minister’s National Relief Fund.

Donations eligible for 100% deduction without qualifying limit including National Defence Fund set up 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 constituted in any district under the chairmanship of the Collector of that district.

Donations eligible for 50% deduction without qualifying limit

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

Donations eligible for 100% deduction subject to 10% of adjusted gross total income

• Donations to the government or any approved local authority, institution or association to be utilised 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.