What are the modes of donations that are eligible for exemption?

Donations can be made through cheque, cash, or draft. Any cash donation above Rs 10,000 is not allowed for deduction under this section. Otherwise complete 100% of the amount that is being donated is considered for deductions.


Which donations are eligible under Section 80GGA?

The following are the amounts that are eligible for deductions in this section. They are:

  • Sum paid to notified Rural Development Fund.
  • Any sum paid to research association who undertakes scientific research.
  • Sum paid to any college, university or any institution used for scientific research approved by the authority.
  • Sum paid to approved association who undertakes rural development program.
  • Any sum paid to the approved association who undertakes training of persons for implementing programs of rural development.
  • Any donation paid to approved institution, public sector company or local authority to carry projects under section 35AC.
  • Any fund for afforestation.
  • Sum paid to approved national poverty eradication fund.

Note: Any deduction that is allowed under section 80GGA, the same expenses will not be deductible under any other section of the income tax act.


Important certificate for claiming deduction under section 80GGA

The taxpayer is required to furnish a certificate named as Form 58A from the payee under rule 110 of the income tax rules 1962. This certificate contains all the information related to the amount paid by the assessee in the previous year to any local authority, public sector company or any institution approved by national committee for carrying a scheme or project.

The certificate should be furnished from the association to the following effect:
  • The programme should involve work for any construction of a structure or a building or laying out road or boring a well. The structure should be used as a school, welfare centre or dispensary and so on. The work may also involve installation of machinery or plant. All these work should be commenced before 1st of March, 1983.
  • Any programme of rural development approved by the prescribed authority commenced before 1st of March, 1983.
In case the institution where the donation is done is involved in training of persons, the certificate must be attested with the following information intact:
  • The association to whom donation is given must be approved by the authority before 1st March, 1983.
  • The training of persons for any project for rural development should be commenced by the institution before 1st March, 1983.

Documents required to prove donations for claiming tax exemption under section 80GGA

Several conditions are to be fulfilled and documents are to be furnished by an assessee to claim deductions under section 80GGA. These documents works as a proof towards donations that are given by the individual. The documents are as follows:

  • Receipts that are stamped which includes registered name of the trust where donation has been given, name of the income taxpayer and amount of donation. The receipt must have the registration number given by the income tax department. The number is very important to be present on receipt for availing tax exemption.
  • Documents regarding receipt of cheque or cash for making the donation eligible for tax exemption. Various banks also avail online donations with tax receipts. Donations made in kind are not eligible for any sort of tax exemption.
  • Any amount more than Rs 10,000 given in cash as donations is not allowed for deductions under section 80G.However, if the amount more than this limit is donated through cheques or drafts or online banking transfers, it is eligible for exemption under this section.

Difference between Section 80G and Section 80GGA

As a fact Section 80GGA is a subsection of Section 80G of the income tax act. But there is a major difference between both the sections. The difference is as follows:

Section 80G Section 80GGA
This section of the income tax act offers exemption of tax for taxpayers for making various donations towards charitable organizations that are registered with Government of India. This section of the income tax act offers exemption of tax for taxpayers for making donations towards organizations involved in any sort of scientific research or rural development. 

Conclusion

The taxpayers can claim deductions for making donations for scientific. Statistical or social research or any other rural development under section 80GGA. All the taxpayers who donate are eligible for deductions except those who have income from a business or profession.

Frequently Asked Questions

Q- Are donations given to scientific research institutions exempt from taxation?

Yes, donations given to notified institution or approved association for scientific research or any rural development is exempted from taxation.


Q- What is the deduction that is allowed under section 80GGA?

Under section 80GGA, the donations given to any approved scientific research project is allowed to be deducted while filing for taxation.


Q- Income from which head is not allowed deduction under this section?

Income from business or profession is not allowed for any deductions for donations under section 80GGA of the Income Tax Act.

CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.