Income Tax under Section 80G

When you earn an income, there is no escaping paying tax. However, the Income Tax Act provides several benefits and deductions that are useful in reducing your tax liability depending on your current income tax slab. The most common section to reduce taxes is Section 80C. The most common section to reduce taxes is section 80C. However, there are several others that provide additional ways to reduce your tax liability. One of these is Section 80G, which offers benefits on donations made to charitable organizations. The objective of this section is to encourage people to donate for social purposes for the betterment of society.

Contributions made to certain charities and relief funds are eligible for tax benefits. However, not all donations are eligible and only contributions made to prescribed charities may be tax deductible under this section.

• The benefits are available to all categories of taxpayers including individuals, companies, and firms
• Contributions must be made either in check or in draft while cash contributions up to INR 10,000 are eligible from the financial year 2017–18
• Deductions may be eligible for either 50% or 100% or without any restrictions

Under section 80GG, if you do not receive house rent allowance but pay rent, you may claim deductions on the rental amount. However, the maximum deduction is capped at 25% of your income or INR 2,000 per month, whichever amount is lower.

Section 80GGB allows companies to claim deductions on contributions made to political parties or electoral trusts. However, donations made to only qualifying parties or trusts are eligible as per the income tax sections.

This section allows individual taxpayers to claim deductions to contributions made to an electoral trust or political party. However, the benefits are not available to artificial judicial persons or local authorities.

You must submit your name, PAN details, address, donation, and the Income Tax Return (ITR) to claim the deductions. To claim the deduction, you need to submit a stamped receipt from the charitable organization or fund.

There is no specified maximum limit to claim deduction under this section. However, in certain instances, the donation may qualify for either 50% or 100% of the amount. Moreover, in some cases, the benefit may be limited to 10% of your adjusted gross income.

Some of the funds that allow 100% deductions are as below:

• Prime Minister’s National Relief Fund
• National Illness Assistance Fund
• Swachh Bharat Kosh
• National Children’s Fund
• Clean Ganga Fund
• National Defence Fund established by the Central Government

Adjusted gross total income is the sum of all earnings under various heads minus the following:

• Exempt income
• cIncome under section 115A, 115AB, 115AC, 115AD, and 115D related to foreign companies and non-resident companies
• All deductions under sections 80CCC to 80U excluding section 80G
• Long-term Capital Gains (LTCGs)

With several benefits offered by the Income Tax Act, making contributions to charitable organizations is advantageous. It not only will help the underprivileged section of the society but will also reduce your tax liability.

There are multiple sections of the Income tax act that can also save tax on insurance. If you are planning to buy health insurance then you can also claim tax benefits on the health insurance premium.