Section 80G. Donations
1. Who can claim deduction : The deduction u/s 80G is available to all assessee who make donation in ‘specified fund’. The fund is divided into two categories. Part A fund and Part B fund.
2. Part A fund: Any amount donated irrespective of the gross total income is eligible for deduction. The deduction allowed is either 100% of donation made or 50% of donation made.
Name of fund | Deduction allowed | |
1. | National Defence Fund | 100% |
2. | The Army Central Welfare Fund of the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund. |
100% |
3. | National Sports Fund set up by the Central Government. | 100% |
4. | National Cultural Fund set up by the Central Government. | 100% |
5. | National Foundation for Communal Harmony | 100% |
6. | National State Blood Transfusion Council | 100% |
7. | National Illness Assistance Fund. | 100% |
8. | Zila Saksharta Samiti. | 100% |
9. | Prime Minister’s National Relief Fund. | 100% |
10. | National Eminent University / Educational Institution approved by the prescribed authority. E.g. Delhi University, IIT’s, AIIMS | 100% |
11. | Fund of Technology Development and Application set up by the Central Government | 100% |
12. | National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities |
100% |
13. | National Children Fund. | 100% |
14. | Prime Minister’s Drought Relief Fund. | 50% |
15. | Jawaharlal Nehru Memorial Fund. | 50% |
16. | Indira Gandhi Memorial Trust | 50% |
17. | Rajiv Gandhi Foundation. | 50% |
3. Part B fund: Where maximum permissible limit is specified to the fund. Amount of donated cannot exceed the maximum permissible limit. Maximum permissible limit is 10% of Adjusted Gross Total Income (GTI).
Computation of Adjusted GTI : It includes all incomes except special incomes which are LTCG and STCG (STT paid), exempted incomes and after allowing all deductions u/s 80C to 80U except section 80G.
Name of fund | Deduction allowed | |
1. | Donation to Govt. / approved Local Authority, Institution, to be utilised | |
a. for promoting family planning | 100% | |
b. for charitable purpose other than promoting family planning | 50% | |
2. | Donation to any notified temple, mosque, gurudwara, church or other place for renovation or repair. E.g. Taj Mahal |
50% |
3. | Donation made by a company to the Indian Olympic association or to an institute notified u/s 10(23G) for the development of infrastructure for sports in India or for sponsorship of sports or games in India. |
100% |
Note : Any donation paid by cash shall be allowed as deduction only if the sum does not exceed Rs. 10,000 per transaction. In order to avail deduction for donation in excess of Rs. 10,000 of each transaction, the mode of payment should be any mode other than cash i.e. by cheque.
Part A fund added by FA 2015
1. | The National Fund for Control of Drug Abuse. | 100% |
2. | Swachh Bharat Kosh. स्वच्छ भारत कोष | 100% |
3. | Clean Ganga Fund (Deduction allowed only to domestic donors) | 100% |
P1: Compute deduction allowed u/s 80G.
Case 1 | Case 2 | Case 3 | Case 4 | |
Business income | 75,000 | 1,40,000 | 1,59,000 | 89,000 |
LTCG | 20,000 | 80,000 | nil | 1,000 |
STCG (STT paid) | 5,000 | 20,000 | 4,000 | 19,000 |
Dividend from Indian Company | 12,000 | 8,900 | 62,000 | 52,000 |
Donation to Govt. for promotion of family planning | 8,000 | 10,000 | 8,000 | nil |
Donation to Govt. for charitable purpose | nil | 6,000 | 14,000 | 8,000 |
PPF contribution | 5,000 | 20,000 | 4,000 | 19,000 |
Ans: 7,000; 11,000; 11,750; 3,500.
Solution:
Computation of Total Income
Case 1 | Case 2 | |
Business income | 75,000 | 1,40,000 |
LTCG | 20,000 | 80,000 |
STCG (STT paid) | 5,000 | 20,000 |
Gross Total Income | 1,00,000 | 2,40,000 |
Less : Deduction u/s 80C | 5,000 | (20,000) |
Less : Deduction u/s 80G | (7,000) | (11,000) |
Total Income | 88,000 | 2,09,000 |
Computation of adjusted GTI
Case 1 | Case 2 | |
Gross Total Income | 1,00,000 | 2,40,000 |
Less : Special Incomes | (25,000) | (1,00,000) |
Less : Deduction u/s 80C | (5,000) | (20,000) |
Adjusted GTI | 70,000 | 1,20,000 |
10% of adjusted GTI | 7,000 | 12,000 |
Donation to Govt. for Family planning. Eligible donation | 7,000 | 10,000 |
Balance donation to Govt. for charitable purpose | nil | 2,000 |
Note 1: To get the maximum deduction apportion the amount first to family planning, then the balance amount to charity.
Note 2: Dividend from Indian Company is exempt u/s 10(34), therefore do not form part of taxable income.
P2: Compute total income from the following informations.
Case 1 | Case 2 | Case 3 | Case 4 | |
STCG | 53,000 | 1,58,000 | 53,000 | 5,000 |
STCG (STT paid) | 3,000 | 3,60,000 | 45,000 | 20,000 |
LTCG | 27,000 | 40,000 | 5,000 | 10,000 |
LTCG (STT paid) | 80,000 | 9,00,000 | 70,000 | 11,111 |
Interest from Central Govt. Securities | 16,000 | 66,000 | nil | 10,000 |
Winning from Games | 6,000 | 3,00,000 | 50,000 | 1,18,000 |
Contribution to Mediclaim of GIC | 3,000 | 3,000 | nil | nil |
Donation to National Defence Fund | 2,000 | 1,00,000 | 10,000 | nil |
Donation to Govt. for family planning | 3,000 | 30,000 | 10,000 | nil |
Donation to Govt. for charitable purpose | 2,000 | 50,000 | 10,000 | 16,000 |
PPF contribution | 15,000 | 15,000 | nil | 10,000 |
Ans: 81,000; 7,65,700; 1,32,850; 1,48,000.
Section 80GG. Deduction in respect of rent paid
1. He lives in a rented accommodation provided by employer or otherwise.
2. He is not in receipt of HRA.
3. He, spouse, minor child or the HUF of which he is a member must not own any RHP at the place where he works or if he owns then he should not claim any concession in respect of SOP for residence u/s 23(2).
4. Amount of deduction
Maximum | • Rs. 5,000 p.m. | L e a s t is deductible |
Formula | • 25% of adjusted GTI | |
Formula | • Rent Paid – 10% of adjusted GTI |
Adjusted GTI (for the purpose of 80GG) is GTI – special income – all deductions u/s 80C to 80U except 80GG.
P1 : Compute total income from the following information:
Basic Salary - 5,00,000
He is provided with accommodation by employer in Delhi @ - Rs. 70,000
Other Income - 70,000
PPF contribution - 1,55,000
Donation to National Fund for Control of Drug Abuse - 2,50,000
Ans: [5,00,000+5,000+70,000=5,75,000 – 1,50,000–2,50,000–43,750 = 1,31,250]
P2: Calculate the deduction allowed under section 80GG.
Business income - 55,000
Interest from debentures - 5,000
PPF contribution - 2,000
Payment made for preventive health check up in cash to Fortis Hospital - 3,000
Rent paid by him for a house occupied by him for the purpose of his residence - Rs. 1,250 per month. [CA N96]
Ans: 9,500; 45,500.
P3 : Compute his total income from the following information:
Business Income - 5,00,000
Other Income - 1,50,000
PPF contribution - 1,50,000
Contribution towards pension plan of LIC - 10,000
Donation made to approved charitable purpose in cash - 25,000
Rent paid - 80,000
Ans: [5,00,000 + 1,50,000 = 6,00,000 – 1,50,000 – 30,000 = 4,70,000]
P4 : Compute total income : Basic Salary of Mrs. X Rs. 6,00,000. Her employer has taken on rent her own house on a monthly rent of Rs. 15,000 and the same has been provided for residence to Mrs. X. Company is recovering Rs. 2,000 per month as rent of house. She is owning only one house and payment of interest of Rs. 2,25,000 and principal of Rs. 1,00,000 was made for housing loan taken for purchase of house. Loan was borrowed on 1- 4 -1998.
Ans : (Sal : 6,00,000 + 66,000 = 6,66,000) (HP : 1,80,000 – 54,000 – 2,25,000 = – 99,000)
(TI : 6,66,000 – 99,000 = 5,67,000 – 80C 1,00,000 – 80GG 0 = 4,67,000)
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2. What is the eligibility criteria for claiming deductions under Section 80G? |
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4. What are the conditions to claim deductions under Section 80GG? |
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