Section 80GGA
Section 80GGA allows deductions for donations made towards scientific research or rural development. This deduction is allowed to all assessees except those who have an income (or loss) from a business and/or a profession. Mode of payment:
Donations can be made in the form of a cheque or by a draft or in cash; however cash donations in excess of Rs 10,000 are not allowed as deductions. 100% of the amount that is
donated or contributed is considered eligible for deductions.
Donations Eligible Under Section 80GGA
● Any sum paid to a research association which undertakes scientific research, or a sum paid to a college, university or any other institution to be used for scientific research that is all
approved by the prescribed authority under section 35(1)(ii)
● Sum paid to a research association which undertakes research in social science or statistical research, or sum paid to a college, university or any other institution to be used for the same purpose,
and these must all be approved by the prescribed authority under section 35(1)(iii)
● Sum paid to a public sector company, local authority or an approved association or institution which carries
out projects or schemes approved under section 35AC.
● Sum paid to an approved association or institution which undertakes any program of rural development
● Sum paid to notified Rural Development Fund
● Sum paid to notified Fund for Afforestation
● Sum paid to notified National Poverty Eradication Fund
● If a deduction has been allowed under section 80GGA,
such expenses shall not be deductible under any other provision of the income tax act.
Adjusted Total Income
● Adjusted total income: Adjusted gross total income is the gross total income (sum of income under all heads) reduced by the aggregate of the following:
● Amount deductible under Sections 80CCC to 80U (but not Section 80G)
● Exempt income
● Long-term capital gains
● Income referred to in Sections 115A, 115AB, 115AC, 115AD and 115D, relating to non-residents and foreign companiesSum paid to notified Fund for Afforestation
Conditions to be satisfied to get approval under Section 80G:
1.Section 80G (5) prescribes certain conditions to be satisfied to get the approval u/s 80G:
a.The Institution should be established in India for Charitable purpose;
b.If the Institution or fund is deriving any income, such income should not be liable to inclusion in its total income under the provisions of sections 11and 12 or clause (23AA) or clause (23C) of section 10;
c.If the institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of section 11shall not apply in relation to such income, if:-
i.the institution or fund maintains separate books of account in respect of such business;
ii.the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and
iii.the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business;
d.The instrument under which the institution is constituted shall not contain any provision for transfer or application of the income or asset for any purpose other than a charitable purpose.
e.The institution should not be for the benefit of any particular religious community or caste.
f.The institution should maintain regular accounts of its receipts and expenditures.
g.The institution should be either constituted as a Public Charitable Trust or a registered society or a company registered u/s 8 of the Companies Act’2013 or is a University established by law, or is any other educational institution recognized by the Government or by a University established by law, or affiliated to any University established by law, or is an institution financed wholly or in part by the Government or a local authority.
Procedure for Registration under Section 80G:
1.Rule 11AA of the Income Tax Rules’1962 provides procedure for seeking approval under section 80G:
2.The application for approval of any institution shall be made in form no. 10G which shall be verified by the person who is authorised to verify the return of income under section 140, as applicable to the assesse;
3.Form No. 10G shall be furnished electronically;
4.under digital signature, if the return of income is required to be furnished under digital signature; or
5.through electronic verification code in a case not covered under clause (i).
a.The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall lay down the data structure, standards and procedure of furnishing and verification of Form No. 10G and shall be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the said form so furnished.
b.The Principal Commissioner or Commissioner may call for such further documents or information from applicant or cause such inquiries to be made as he may deem necessary in order to satisfy himself about the genuineness of the activities of the applicant.
c.Where the Principal Commissioner or Commissioner is satisfied that all the conditions laid down in section 80G(5) are fulfilled by the applicant, he shall record such satisfaction in writing and grant approval under clause (vi) of sub-section (5) of section 80G.
d.Where the Principal Commissioner or Commissioner is satisfied that one or more of the conditions laid down in section 80G(5) are not fulfilled, he shall record the reasons in writing and reject the application for approval after giving the applicant an opportunity of being heard.
Time Limit of Passing Order:
The order granting approval under section 80G(5) or rejecting the application shall be passed within the period of six months from the end of the month in which such application was received. In computing the period of six months, any time taken
by the applicant in not complying with the directions of the Commissioner shall be excluded.
Important Note: Amendment by Finance Act’2017
“No deduction shall be allowed under this section in respect of donation of any sum exceeding TWO thousand rupees unless such sum is paid by any mode other than cash.” Finance Act 2017 amended section 80G so as to provide that no deduction shall be allowed under the section 80G in respect of donation of any sum exceeding Rs. 2,000/- unless such some is paid by any mode other than cash.
Earlier this limit was 10, 000/-.Government has taken this step in order to provide cash less economy and transparency.
| Questions |
Remarks |
What is Section 12-A of Income Tax Act? |
Income of an organization is exempted if NGO has 12-A registration. This is one time registration. |
What is section 80-G of Income Tax Act? |
If an organization has obtained certification under section 80-G of Income Tax Act then donors of that NGO can claim exemption from Income Tax. Earlier it was not not one time registration and trust were required to get 80G Certificate renewed after validity period.
But As per Circular 7/2010 dated 27.10.2010 issued by the CBDT, all Trusts enjoying exemption u/s 80G as on 1.10.2009 and other Trusts obtaining 80G certificate after 1.10.2009 shall continue to hold and enjoy the same for perpetuity unless revoked by the Income Tax Authorities. |
When an organization can apply for registration under section 12A and 80G of Income Tax Act? |
Application for registration under section 12A and 80G can be applied just after registration of the NGO. |
Where to apply for registration under section 12A and 80G of Income Tax Act? |
Application for registration under section 12A and 80G can be applied to the Commissioner of Income Tax (Exemption) having jurisdiction over the institution. |
Can both the application under section 12A and 80G of Income Tax Act be applied together? |
Yes, Both applications can be applied together or it can be also applied separately. If some organization is willing to apply both applications separately, then application for registration u/s 12A will be applied first. Getting 12A registration must for applying application for registration u/s 80G of Income Tax Act. |
What is the timeline for getting registration under section 12A and 80G of Income Tax Act? |
If application for registration under section 12A and 80G will be applied through NGO factory, it should take 3-4 months. |
What applications Form are being used for applying for registration under section 12A and 80G of Income Tax Act? |
For 12A registration : Form 10AFor 80G registration : Form 10G ( For New Application and renewal both) |
What is the validity period of the registration under section 12A and 80G of Income Tax Act? |
12A registration: Lifetime validity80G registration: 1to 3 years validity |
What are the conditions on section 80G? |
There are few conditions on section 80G:· The NGO should not have any Income which is not exempted, such as business income. If the NGO has business income then it should maintain separate books of account and should not divert donations received for the purpose of such business.· The bylaws or objectives of the NGOs should not contain any provision for spending the income or assets of NGO for the purpose other than charitable.
· The NGO should not work for the benefit of particular religious community or caste.
· The NGO should maintain regular accounts of receipt & expenditure.
· The NGO should properly register under the societies Regulation Act 1860 or under any law corresponding to that Act or should register under section 25 of the Companies Act 1956. |
What is the Tax Exemption Limit on donation? |
There is a limit on how much money can be exempted from the Income Tax:· If the amount of deduction to a charitable organization or trust is more than 10% of the gross total Income computed under the Act (as reduced by income on which income tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), then the amount in excess of 10% of Gross Total Income shall not qualify for deduction under section 80G.· The persons or organizations who donate under section 80G gets a deduction of 50% from their taxable Income. |
