The pandemic situation has led many poor workers to lose their jobs and livelihood and amid this situation donation has played a vital role to meet their daily necessities. So to encourage this and keeping in mind the interest of donors, Income Tax Act, 1961 have introduced Section 80G dealing with deductions related to donations made for social and charitable cause.
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Applicability of Section 80G
All the assessees, whoever makes the eligible donation under this section are entitled to get a tax deduction under this section. Here, donation made to any foreign trust is not eligible for any deduction. Wherein, Non Resident Indians are eligible for deduction provided that they donate to an eligible institution and fund. Eligible institutions or trust means the trust, society, charitable institutions registered under section 12AB or Section 8 companies. This Deduction can be claimed by any taxpayer- individuals, company, firm or any other person.
Maximum donation Allowable under Section 80G
As such there is no upper limit on the amount of donation made, however if the amount of donation exceeds 10% of the adjusted gross total income, the amount exceeding the former limits will not allowed as deduction.
Also, any donation made in excess of Rs. 2000 in cash will not be allowed as deduction.
Amount of deduction allowed under Section 80G
Section 80G provides certain qualifying limits i.e. some donations are eligible for 100% deduction with or without qualifying limits while others are eligible for 50% deduction with or without qualifying limits. The following table provides details about the list of eligible institutions under various qualifying limits.
|Qualifying limits||Eligible Institutions|
|100% without any qualifying limit||
Also donation under PM or CM COVID relief fund will also be allowed under this category.
|100% deduction subject to 10% of adjusted gross total income||
|50% deduction without any limits||
|50% deduction subject to 10% of adjusted gross total income||
Note: Adjusted income here means gross total income reduced by
- Amount of deduction allowed under Sections 80CCC to 80U (but not Section 80G)
- Exempted income
- Long-term capital gains
- Short- term capital gains taxable @15 per cent under section 111A.
- Income under sections 115A, 115AB, 115AC, 115AD relating to non-residents and foreign companies.