How Section 80G, 80GGA, 80GGB, and 80GGC of Income Tax Act can help you save up to 100% of the amount on political, charitable, philanthropic donations

Income tax regulations in India allow taxpayers to claim a deduction for donations to charity in a financial year.
 
Charity is another method for saving tax in India. Sections 80G, 80GGA, 80GGB, and 80GGC cover provisions that make your donations tax deductible.
 
However, not every charity provides a 100 per cent tax deduction on donations. In some circumstances, just 50 per cent of the donation value can be deducted. Donations can also be made to scientific institutes and religious organisations to get a tax deduction. Donations of more than Rs 2,000 should not be sent in cash.

Who can claim a deduction under Section 80G?

All taxpayers under the old tax regime can claim the deduction under Section 80G. Taxpayers under the new tax regime cannot avail this benefit.
 
Types of deductions under Section 80G and their funds' name

Donations under Section 80G are roughly categorised into four types, as listed below.
 
Donations with a 100 per cent deduction (no qualifying limit): Donations made under this category are eligible for a full tax deduction and are not subject to any qualification limits. Donations to the National Defence Fund, Prime Minister's National Relief Fund, The National Foundation for Communal Harmony, National/State Blood Transfusion Council, and other organisations are eligible for such deductions.
 
Funds
(i) National Defence Fund
(ii) PM National Relief Fund
(iii) PM Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND)
(iv) National Children's Fund
(v) CM Relief Fund or the Lieutenant Governor's Relief Fund
(vi) Zila Saksharta Samiti
(vii) Army Central Welfare Fund
(viii) Indian Naval Benevolent Fund
(ix) Air Force Central Welfare Fund
(x) Andhra Pradesh CM Cyclone Relief Fund
(xi) National Sports Fund
(xii) National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
(xiii) Swachh Bharat Kosh (not being in pursuance of CSR)
(xiv) Clean Ganga Fund (not being in pursuance of CSR) - Only to the resident assessee
(xv) National Fund for Control of Drug Abuse
(xvi) National Illness Assistance Fund
(xvii) National Blood Transfusion Council or State Blood Transfusion Council
(xviii) Fund set up by a State Government for the medical relief to the poor
(xix) National Cultural Fund
(xx) Fund for Technology Development and Application
(xxi) National Foundation for Communal Harmony
(xxii) PM Armenia Earthquake Relief Fund
(xxiii) Africa (Public Contributions - India) Fund
(xxiv) CM Earthquake Relief Fund, Maharashtra
(xxv) A university or educational institution of National eminence approved by the tax authorities
(xxvi) Fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat.
 
Donations with a 50 per cent deduction (without a qualifying limit): Donations given to trusts such as the Prime Minister's Drought Relief Fund, the National Children's Fund, the Indira Gandhi Memorial Fund, and others are eligible for a 50 per cent tax reduction on the amount donated.

Funds
(i) Jawaharlal Nehru Memorial Fund
(ii) PM Drought Relief Fund
(iii) Indira Gandhi Memorial Trust
(iv) Rajiv Gandhi Foundation
 
Donations with a 100 per cent deduction (up to 10 per cent of adjusted gross total income): This category includes deductions for donations made to local authorities or the government to encourage family planning, as well as donations to the Indian Olympic Association. In such circumstances, deductions are limited to 10 per cent of the donor's adjusted gross total income. Donations over this amount are rounded off by 10 per cent.
 
Funds
(i) Family Planning Association of India/Red Cross Society of India
(ii) Government or any approved local authority, institution, or association to be utilised to promote family planning.
(iii) Indian Olympic Association or any other notified association or institution established in India for the development of infrastructure for sports and games in India or the sponsorship of sports and games in India.
Notable, deductions to these institutions are allowed to companies only, not to individual taxpayers.
 
Donations with a 50 per cent deduction (up to 10 per cent of adjusted gross total income): Donations given to any local authority or the government that will utilise the funds for any charitable purpose are eligible for deductions under this category. In such circumstances, deductions are limited to 10 per cent of the donor's adjusted gross total income. Donations over this amount are limited to 10 per cent.

Funds
(i) Notified temple, mosque, gurudwara, church, or other place (for repairs or renovation)
(ii) Government or any local authority to be utilised for any charitable purpose other than the purpose of promoting family planning
(iii) Any corporation specified in Section 10(26BB) for promoting interest of minority community
(iv) Any authority constituted in India either to deal with and satisfy the need for housing accommodation or the purpose of planning, development, or improvement of cities, towns, villages, or both.
(v) Any other fund or any institution fulfilling the conditions as specified in Section 80G(5).
 
For example, to begin, contributions to the Shri Ram Janmabhoomi Teerth Kshetra Trust for Ayodhya Ram Temple building are eligible for a 50 per cent deduction under Section 80G of the Income Tax Act of 1961. A Rs 20,000 contribution can result in a Rs 10,000 reduction from taxable income. This comes under Section 80G 2(b) starting from FY 2020-21.
 
Let's understand the calculation with another example.
Nitish Gupta, an Indian taxpayer, earns a taxable salary of Rs 5,00,000. He has deposited Rs 40,000 in both the Public Provident Fund (PPF) and her company's provident fund (PF). She donated Rs 45,000 to the CRY (Child Relief and You) Trust. Assuming she has no other income, her taxable income will be determined as follows:
 
His gross salary is Rs 5,00,000; deduction under 80C would be Rs 80,000; and gross total income before 80G would be Rs 4,20,0000.
Now, if she donates to CRY, the actual donation amount would be Rs 45,000, and 10 per cent of gross total income as per the above calculation is Rs 42,000. Since 42,000 is the lower amount, this will be considered the qualifying amount too.

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Now see this calculation below:
Gross total income (before 80G): Rs 4,20,000
Deduction under 80G: 50% of Rs 42,000= Rs 21,000
Total taxable income: Rs 3,99,000

What are the documents needed to avail of the benefit?

• Donation receipt
• Proof of payment
• ITR form

Section 80GGC and 80GGB tax deductions- donation to a political party

Tax breaks on political donations are offered in two sections: 80GGB and 80GGC.
 
Deduction under Section 80GGB for eligible taxpayers - Any Indian firm that contributes to a political party or electoral trust registered in India is entitled to a deduction.
 
Deduction under Section 80GGC - Eligible Taxpayer - All taxpayers, excluding Indian businesses, local governments, and artificial juridical persons who are entirely or partially sponsored by the government.

What is the maximum deduction limit under Section 80GGb and 80GGC?

Individuals and businesses can deduct 100% of the money they give to a political party under Sections 80GGC and 80GGB, respectively. The total donation is tax deductible if it does not exceed the qualifying taxpayer's taxable income.
 
This significantly reduces their overall taxable income, allowing them to save on taxes.
 
But as per the Companies Act 2013, companies can contribute up to 7.5 per cent of their annual net profit (three years average) under Section 80GGA. It is necessary that the respective company discloses the amount contributed and the name of the political party in its profit and loss account for the said financial year.

What is Section 80GGA?

This clause of the Income Tax Act exempts taxpayers from paying taxes on gifts made to organisations interested in scientific research or rural development.
 
Deduction limit: Any sum higher than Rs 2,000 provided in cash as a contribution is not eligible for deduction under Section 80GGA. However, if an amount is donated or contributed by cheques, drafts, or online banking transactions, the 100 per cent amount is excluded under this clause.

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