The Buyt Desk
Not all donations can be claimed under Section 80GGA of the Income Tax Act. It has specific terms and conditions to claim donations made in the assessment year.
In India, there are two fields that need constant financial aid for development which are rural growth and scientific research. Not many contribute or donate funds to these fields but most donations are for religious purposes in India. There are very few who extend financial assistance to scientific research in India. To encourage Indian citizens to donate more such donations, the Government of India offers tax exemptions on donations made towards scientific research and rural development under Section 80GGA. Section 80GGA of the Income Tax Act has a narrow scope with terms and conditions.
What is Section 80GGA of the Income Tax Act?
Section 80GGA of the Income Tax Act provides tax exemption on charity /donations made towards scientific studies and rural development. Donors can enjoy tax benefits for supporting these noble causes. Government appreciates donations made for boosting scientific research in the country and Section 80GGA is a gift the donor gets. Though this section encourages individuals to contribute financially to science, it has few strict restrictions and rules.
Who is entitled to claim tax deduction under Section 80GGA?
Any individual making donations for scientific research and rural development is entitled to claim a tax deduction under Section 80GGA but he/she should not have a business or profession. For individuals owning a business or an enterprise, it is Section 35 of the Income Tax Act for tax deductions. Before filing income tax returns, for details of particular terms of different sections, do check the official website of Income Tax. Also, look for all deductions under section 80GGA.
What are the deductibles under Section 80GGA?
All types of donations are not covered under Section 80GGA of the Income Tax Act. But only in specified areas, and limited donations are deductible. One can make only one claim per assessment year.
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Donations made towards associations that train rural youths or residents
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Donations made towards afforestation and rural development fund
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Donations made towards institutes /associations that adhere to Section 35CCA and participate in rural development programs
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Donations made towards research / social science /statistics done at colleges/ institutions /associations
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Donations made towards the National poverty eradication
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Donations made towards research universities/ associations /institutes work as per rules prescribed under Section 35(1) (ii)
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Donations made towards schemes or projects approved under Section 35AC undertaken by local authorities or public sector companies
What are the applicable payment modes and deduction limits under Section 80GGA?
100% deductions can be claimed on donations made under Section 80GGA and the maximum amount is not set to make donations. The maximum cash donation that can avail of the tax deduction benefit is Rs 10000/- but through other forms, there is no limit. The donation made through demand draft, cheque and cash is acceptable. To claim 100% deductions for donations above Rs 10 thousand, one must donate through a cheque or demand draft.
What documents are needed to claim deduction under Section 80GGA?
Individuals should submit necessary papers that authenticate the donations made. Either a cash receipt or cheque receipt should be submitted as proof. This receipt should have an income tax department-approved registration number. It should be stamped by an authorized trust and have details like the donor’s name, address, donation amount and name of the trust to which the donation is made.
