Deductions under Section 80G & 80GG

Deductions under Section 80G

To encourage the concept of donations or charity towards the needy and the poor section of the society, the government of India has been regularly promoting people for charity and to donate some of their income and this donation also can be claimed as a deductions under section 80G of the Income Tax Act.

Donations made to charitable institutions (registered U/s 12AA) and certain relief funds shall be allowed as a deduction under Section 80G of the IT Act.

All donations or charity made are not qualified for deduction U/s 80G. Only donations made to qualified funds are eligible as a deduction.

Deduction under section 80G is allowed as a deduction to all types of assessee – This deduction U/s 80G can be claimed by any assessee -individuals, HUF, Firm, company or any other person.

The manner of Payment – The donation made under section 80G can be claimed as a deduction when it has been made through cheque or demand draft or in cash. However, the contribution made under this section in cash exceeding Rs. 10,000 is not allowed as deduction. Any contribution made in kind (such as clothing, food material, medicines etc.) are not eligible for deduction u/s 80G.

Limit on the amount of Donation that can be claimed as a deduction – A variety of donations is specified in section 80G which are entitled to deduction up to either 100% or 50%  as provided in section 80G of the Income Tax Act. 

80GG – Deduction of House Rent

Section 80GG of the IT Act, provides Deductions for House Rent paid, provided that no HRA deduction has been claimed under any provisions of the Income Tax Act.  In simple words, if a person as an employee is being provided with HRA (House Rent Allowance) from his employer and the same has been claimed as deduction then the employee won’t be qualified to claim deduction under section 80GG for the payment of the house rent.

All the other assessee who is not getting any advantage of HRA and or they are not claiming the expense for the payment of house under any provisions  of other section of the IT act  are eligible to claim deduction under Section 80GG.

The Deduction under section 80GG allowed shall be the lower of the following:

1. Rs. 5,000 per month
2. Rent Paid minus 10 percent of the total income
3. 25 percent of the aggregate total income of the assessee for the year

The total Income signifies Total Income of the assessee for the year prior claiming any deduction U/s 80GG of the IT act. Furthermore, the total rent paid (either for semi furnished or for full furnished) for the house would be recognized for the purpose of claiming deduction U/s 80GG of the IT act.