Sections 80G, 80GGA, 80GGB and 80GGC of the Income Tax Act all cover tax deductions for donations, but there are some key differences. (Representative image)
Some donations may be fully exempt from tax under certain conditions, while others may be only partially exempt or not at all.
Donations in India are driven by a desire to help others and contribute to social good, along with the potential tax savings benefits through Section 80G. Donations address a variety of needs, from long-standing social problems to immediate crises. Many people donate to support areas they care about, such as poverty alleviation, education, healthcare, and environmental protection. Some even donate to political parties.
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Donations are also a part of many religious practices in India. People donate to temples, mosques, gurudwaras, and other religious institutions as a way to express their faith and support their religious communities.
Donation tax exemption in India
Tax deductions under the Income Tax Act are a system that lowers tax liability by reducing a portion of donations made by taxpayers from taxable income. This acts as an incentive for people to donate. Tax exemptions encourage charitable donations that benefit society as a whole. At the same time, donors can save on taxes.
Some donations may be fully exempt from tax under certain conditions, while others may be only partially exempt or not at all.
Are all donations 100% tax exempt?
No, not all donations are 100% tax-exempt. Tax deductions depending on the recipient of the donation (charitable institutions, government-established funds, scientific research, etc.) are as follows:
- Donations are 100% deductible with no limit.
- Donations eligible for 50% deduction without limit
- Contributions that are 100% deductible, subject to qualifying limits.
- Contributions eligible for 50% deduction, subject to qualifying limits
Please check the exemption limit on your donation receipt and claim the corresponding deduction when reporting.
Sections 80G, 80GGA, 80GGB and 80GGC of the Income Tax Act all cover tax deductions for donations, but there are some key differences.
Section 80G:
This is the main section on tax deductions for donations.
Allows deductions for donations to a variety of qualifying organizations, including NGOs, religious organizations (subject to certain restrictions), and educational institutions.
The deduction rate can be 50% or 100% of the donation, depending on the type of organization.
2,000 people who donate cash upto Rs 5,00,000 will be eligible for deduction under Section 80G.
Section 80GGA:
This is a sub-clause of Section 80G which provides additional benefits.
It provides a 100% deduction for donations for specific purposes such as scientific research or rural development schemes.
This deduction is applicable to all assessees except those filing returns under the new tax regime (Section 115BAC).
Sections 80GGB and 80GGC: (tax exemption for political party donations)
These are all subsections related to political donations.
- Section 80GGB: This allows companies to claim a 100% deduction on donations made to registered political parties.
- Section 80GGC: This allows individuals to claim a 100% deduction on donations made to registered political parties.
Important points for 80GGB and 80GGC:
- Donations cannot be made in cash. Only digital transfers are accepted.
- This deduction is only available if you file your taxes under the old system (not the new section 115BAC).
- Your total deduction cannot exceed your taxable income.
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