Section 80GGA of Income Tax Act
Donations made towards scientific research or rural development is allowed for 100% exemption under section 80GGA. This deduction is applicable to all tax payers except those who are earning their income (or loss) from a business/profession.
100% of the donation amount paid to institutions is exempted under section 80GGA. The donation amount is deducted from the gross total income and the balance amount is taxable as per the rates given in the income tax slab.
Modes of payment for Donation
There are various modes of payment by which taxpayers can deposit the donation amount to the institutions. A donation amount can be paid in the form of cash or cheque or draft. However, donations paid through cash exceeding Rs 10,000 are not permitted for deduction under section 80GGA. For ex – Miss Rita has a taxable income of Rs 5,00,000 annually. She donates Rs 50,000 to an institute involved in scientific research. The donation amount of Rs 50,000 is eligible for deduction under section 80GGA only, if the payment is made by cheque or draft. If the donation is made through cash, maximum amount of Rs 10,000 will be allowed as deduction.
Who can claim deduction under Section 80GGA?
Taxpayers who are earning income under the head income from salary/house property/capital gain/other services can claim deduction under section 80GGA.
Who cannot claim deduction under Section 80GGA?
Taxpayers who are earning income under the head “Income from business/profession” are not allowed to claim exemption under section 80GGA.
Taxpayers who are earning income from business/profession are already taking deduction for scientific research under section 35. Therefore, they are not allowed to claim deduction under section 80GGA.
Donations eligible under Section 80GGA
Donations can be claimed as deduction under section 80GGA of the income tax act. Before making deductions, make sure that whether it is eligible for deduction or not. Following donations are eligible for deduction under section 80GGA –
- Donations made to institutions/associations/universities engaged in the work of scientific research. These associations/institutions must follow the rules prescribed under section 35(1) (ii).
- Donations made to institutions/associations/colleges engaged in research related work in the field of social science or statistics.
- Donations made to institutions/organizations engaged in providing rural development training to individuals or groups.
- Donations made to institutions/associations engaged in rural development programs and it must be approved under section 35CCA.
- Donations made to institutions/associations/public sector companies or local authorities engaged in schemes or projects that are already approved under section 35AC.
- Donations made to Afforestation fund
- Donations made to rural development fund
- Donations made to the national poverty eradication fund.
Documents required for claiming deduction under Section 80GGA
Following documents are required to claim deduction under section 80GGA –
- Copy of form 58A - Copy of form 58A including Name of the donee, PAN of the donee, Address of the donee and the donation amount.
- Double deductions under section 80GGA - A tax payer is allowed to claim only one deduction for a particular assessment year. If you have already claimed deduction under section 80GGA, you are not eligible to claim any deduction in the same year.
- Approval withdrawal – Make sure that you check the institution before donating them money as sometimes institute lose their affiliation/approval and then you will not be able to claim the deduction. A donation made to an institute is only valid if it doesn’t lose its approval.
- Stamped receipts – Stamped receipts including the registered trust name (to whom the donation is made), name of the income tax assesse and the donation amount. Receipt should have the registration number mentioned on it as it helps in processing of tax exemption.
Also Read - Section 80G: Income Tax Deduction for Donations