Section 80GGA of Income Tax Act

Donations are a great way of contributing to the development of society. While it is a impacts lives, it is also a noble activity to partake in. According to research, donating to charity or other developmental activities is a major mood-booster. When you know you are helping lives, you will automatically feel happier and satisfied.

According to a report, research has found a link between making a donation to charity and increased activity in the area of the brain that registers pleasure. In order to make donations a norm, the Government has provided a tax Deduction for donations to charitable organisations and other developmental activities. Section 80G of the income tax Act 1961 provides this.

This section refers to the deduction toward donations made toward scientific research or rural development. Let’s take a look at this in detail.

What is Section 80GGA?

It is a provision that allows deductions over donations done toward scientific research or rural development. This deduction is open for all Income taxpayers except for those who have an income or loss from a business or a profession.

The mode of payment for donations can be made in the form of a cheque, draft or cash. Remember that the cash donation in excess of Rs. 10,000 is not allowed as deductions.

Eligible Donations Under Section 80GGA

The following donations are eligible for deduction under section 80GGA:

1. Rural Development Fund

The donation paid to the Rural Development Fund is eligible for deduction.

2. Scientific Research Association

Donations made toward research associations undertaking scientific research are eligible.

3. Educational Institution

Donations made toward college, university or other institutions used for scientific research which is approved by authorities is eligible.

4. Organisations for Rural Development Program

Donations toward organisations or associations working and undertaking rural development programs are eligible.

5. Projects Under Section 35AC

A donation toward the approved institution, public sector company or local authority to carry projects under Section 35AC is eligible.

6. Afforestation

A donation toward afforestation is eligible.

7. National Poverty Eradication Fund

A donation toward approved activities of the national poverty eradication fund is eligible for deduction under Section 80GGA.

Note that deduction allowed toward expenses under Section 80GGA will not be Deductible under any other section of the IT Act.

Documents Required for Proving Donations Under Section 80GGA

There are conditions that have to be fulfilled and documents have to be presented in order to claim deduction under section 80GGGA. The documents are mentioned below:

1. Receipts

You will have to present receipts stamped with the registered name of the trust of the respective donation, taxpayer name and the donation amount. The Receipt must also include the registration number as mentioned by the Income Tax Department. This number is extremely important to be present on the receipt in order to avail the tax exemption.

2. Documents

You will have to present documents regarding the receipt of cheque or cash for making the donation to be approved for tax exemption. Banks also avail online donation with tax receipts.

3. Cash

Donations above Rs. 10,000 in cash is not allowed for deduction under Section 80G. If the amount is more than this limit but is donated through cheque, draft or online Bank transfer, it is eligible for exemption under Section 80GGA.

Certificate for Claiming Deduction Under Section 80GGA

If you wish to avail this exemption, you will also need to present a certificate known as Form 58A from the payee under Rule 110 of the Income Tax Rule/ The certificate contains the information related to the amount you have paid in the previous tax year to any local authority, sector, company, institution approved by the national committee for carrying out a scheme or project.

The certificate for deduction under Section 80GGA should be presented from the association keeping in mind the points mentioned below:

The programme should be involving the work for construction of the structure, building or road laying. The structure should be used as a school, welfare centre or dispensary. The work could also include the installation of machinery or plan. The work should have been commenced before March 1, 1983. Rural development programme that is approved by the authority should have commenced before March 1, 1983.

Difference Between Section 80G and Section 80GGA

Section 80GGA is a subsection of Section 80G of the Income Tax Act, but there is a major difference between both. Take a look:

Conclusion

Section 80GGA is beneficial if you are making donations to approved scientific research organisations and rural development initiatives. File all the necessary details and get the exemption.