Section 80GGA of the Income Tax Act, 1961 stipulates deductions to the donations made for scientific research and rural development. The section provides benefits to the donors and also promotes scientific and rural development in the country. This section was created with an aim to offer incentives to donors, helping them save money, and increasing generosity in India.
An immense number of institutes which delve into scientific research and rural development depends on voluntary donations made by people. Section 80GGA acts as a helping hand for different institutions related to scientific research and rural development-boosting contributors to enhance the growth and development of the country.
Provision under Section 80GGA
Deduction under Section 80GGA of the Income Tax Act, 1961 is not open for all. People whose Gross Total Income excludes pay which can be charged under profit and gains of a business are qualified for deductions. Basically, citizens who don’t have a pay source from business or profession are entitled to such deductions.
Eligibility for deduction under Section 80GGA
The following donation is eligible for tax deduction under Section 80GGA:
- Donation to Afforestation Fund
- Donation made to the National Poverty Eradication Fund
- Donation to the Rural Development Fund
- Donations to institutions/public sector companies or local authorities involved in projects or schemes approved under Section 35AC.
- Donations to institutions/associations involved in providing Rural Development Training.
- Donations to associations/colleges/institutions which are involved in research related to Social Science and Statistics.
- Donations to institutions/ associations involved in Rural Development Program. The associations getting the amount of donation should fulfill the criteria set under Section 35CCA.
- Donations to research institutes/universities involved in scientific research. The institutes should fulfill the criteria set under Section 35(1) ii
How much deduction can be claimed?
The donations made under Section 80GGA are eligible for a 100% tax deduction as there is no upper limit for the deduction amount. The mode of payment for providing any donation is Cash/Cheque/Demand Draft. However, cash donations of more than Rs 10,000 do not qualify for a deduction.
How to claim the deduction?
In order to claim the deduction, the taxpayer needs to provide the following details along with the Income Tax Return (ITR):
- Name of the donee
- Address of the donee
- Amount to be contributed
Section 80GGA and 35AC
Sections 35AC and 80GGA have something in common with regards to income tax deductions. While Section 80GGA offers a 100% deduction on donations made by people who have a salary source that doesn’t originate from a business or profession, Section 35AC offers a 100% deduction to the people whose total gross income comes from a business or profession.
The significant contrasts between these two sections lie in their carry-forward policy. While deduction under Section 35AC can be carried forward to next year as a misfortune, deduction under Section 80GGA cannot be carried forward to next year in the form of losses.
Things to Remember
Donors need to guarantee they have a duplicate of Form 58A, which is fundamental for them to claim a 100% tax deduction in lieu of donations made to organizations/NGOs.
Double deductions under Section 80GGA
80GGA does not allow double deductions, for example on the off chance if a donation is made for a noble cause as a deduction for a particular assessment year, then no other deduction is permitted under the section in the same year. Only a single deduction is allowed in a year.
One should determine the status of a foundation before giving cash to check whether it is enrolled and conforms to the standards set up. It is possible for organizations to lose their affiliations/endorsement at any time. In such cases, any donation made to a foundation before it loses its endorsement stands substantial and can be claimed for deduction.