The primary aim of Section 80G of the IT Act is to encourage taxpayers to donate to charitable institutions and relief funds. Eligible taxpayers can claim deductions of up to 100% of the donations made to prescribed charities and funds.

Section 80G of the Income Tax Act is further divided into four subsections to offer more deduction options to the taxpayers.

1. Section 80GG

Not every employer offers HRA (House Rent Allowance). Individual taxpayers who don’t receive HRA but live on rent can claim tax deduction under Section 80GG. The maximum deduction can be up to 25% of the total income or Rs. 5,000 per month. The lower of the two can be claimed as a deduction.

But note that if you own any residential property which is treated as your self-occupied property, you cannot claim tax deduction under Section 80GG.

Deduction Percentage- 25% of the total income or Rs. 5,000 per month (lower of the two)
Maximum Deduction- Rs. 60,000
Form for Claiming Deduction- 10BA

2. Section 80GGA

Taxpayers who do not have any income or profits from professions or businesses can make donations towards rural development or scientific research. Such donations are eligible for a tax deduction of 50%-100% under Section 80GGA.

Note that donations above Rs. 10,000 made in cash are not eligible for tax deductions under this section.

Deduction Percentage- 50%-100%
Maximum Donation- Not above the gross income
Form for Claiming Deduction- Form 58A

3. Section 80GGB

Companies and enterprises in India can also donate funds to any political party that is registered under Section 29A of the Representation of the People Act, 1951. Such donations are also eligible for 100% tax deductions under Section 80GGB.

Apart from political parties, donations can also be made to electoral trusts. Companies not wanting to disclose the name of the party to which they have donated the funds to can donate via electoral bonds.

Deduction Percentage- 100%
Maximum Donation- 7.5% of the net profits in the last three years
Form for Claiming Deduction- Applicable ITR form

4. Section 80GGC

Just like Section 80GGB offers a tax deduction for companies on their donations to political parties, Section 80GGC offers the same to individuals. With Section 80GGC, individual taxpayers can make donations to political parties or electoral trusts and claim 100% tax deduction on the donated amount.

Individuals can provide details of their donations to their employer so that the same can be added to their Form 16.

Deduction Percentage- 100%
Maximum Donation- 10% of gross earnings
Form for Claiming Deduction- Form 16

Claim Tax Deductions Under Subsections of Section 80G

Take advantage of all the applicable subsections of Section 80G to reduce your income tax liabilities and save more. Professional help is highly recommended to make the best use of all the available deductions.

Click here to visit our personalized online advisor that gives you the financial expertise you need.

DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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