• Adjusted gross total income: The adjusted gross total income (AGTI) is used to compute the gross qualifying amount for donations made to certain charitable institutions under Section 80G of the Income Tax Act, 1961. The AGTI is Maximum qualifying limit: The maximum qualifying limit for donations made to charitable institutions under Section 80G is 10% of the AGTI.

• Net qualifying limit: The net qualifying limit is the lower of the following:
  • 10% of the AGTI
  • The actual amount of donation made
• Amount deductible: The amount deductible under Section 80G is 100% or 50% of the donation amount, subject to the net qualifying limit.
• Donations made to multiple institutions: If a taxpayer makes donations to multiple institutions under Section 80G, the total amount deductible is limited to the net qualifying limit.
• Donations made in cash: Donations made to charitable institutions under Section 80G must be made through cash or electronic mode. Donations made in kind are not eligible for deduction under this section.
• Documentary evidence: Taxpayers claiming deduction under Section 80G must have documentary evidence to support their claim, such as a receipt issued by the charitable institution.

Here are some other things to keep in mind when computing the gross qualifying amount for donations under Section 80G:

• Donations made to certain institutions: Donations made to certain institutions, such as the Prime Minister’s National Relief Fund and the Chief Minister’s Relief Fund, are eligible for a 100% deduction without any limit.
• Donations made by individuals and HUFs: Donations made by individuals and Hindu Undivided Families (HUFs) are eligible for deduction under Section 80G. Donations made by companies are not eligible for deduction under this section.
• Donations made to registered institutions: Donations must be made to registered charitable institutions in order to be eligible for deduction under Section 80G.

EXAMPLE

• Deductions under section 80G and 80GGA: Donations made to certain specified charitable institutions and relief funds are eligible for deduction under section 80G and 80GGA of the Income Tax Act. However, the deduction is subject to a limit of 10% of the adjusted gross total income (AGTI). The AGTI is calculated by subtracting certain specified deductions from the gross total income (GTI). For example, the deduction under section 80C for life insurance premiums and other investments is subtracted from the GTI to arrive at the AGTI.
• Deductions for state-specific schemes: Some states in India offer additional deductions for donations made to certain state-specific schemes. For example, the Maharashtra government offers a deduction of up to 50% of the donated amount for donations made to the Chief Minister’s Relief Fund.
• Clubbing of income: In certain cases, the income of different family members is clubbed for tax purposes. For example, the income of a minor child is clubbed with the income of the parent. In such cases, the donations made by all family members are clubbed together for the purpose of claiming deduction under section 80G and 80GGA.

Here is an example of how to compute the gross qualifying amount for deduction under section 80G in the state of Maharashtra:

Example:

• Gross total income (GTI): ₹10,00,000
• Deductions under section 80C: ₹1,50,000
• Adjusted gross total income (AGTI): ₹8,50,000
• Donation made to the Chief Minister’s Relief Fund: ₹50,000

FAQ QUESTIONS

Q: What is the Gross Qualifying Amount (GQA)?

A: The GQA is the amount of income that is eligible for deduction under Section 80G of the Income Tax Act, 1961. It is calculated as follows:

GQA = Total income – (Exempt income + Deductions under other sections of the Income Tax Act)

Q: What are the different types of donations that are eligible for deduction under Section 80G?

A: The following types of donations are eligible for deduction under Section 80G:

• Donations to charitable institutions or funds that are approved by the Central Government.
• Donations to scientific research associations, universities, and other educational institutions.
• Donations to religious trusts.
• Donations for relief and rehabilitation of victims of natural disasters.
• Donations to certain rural development programs.

Q: How is the amount of deduction under Section 80G calculated?

A: The amount of deduction under Section 80G is calculated as follows:

• For donations to certain specified institutions or funds, the deduction is allowed at 100% of the amount donated, subject to a maximum of 10% of the GQA.
• For donations to other institutions or funds, the deduction is allowed at 50% of the amount donated, subject to a maximum of 10% of the GQA.

Q: What are the documents required to claim deduction under Section 80G?

A: The following documents are required to claim deduction under Section 80G:

• A receipt from the charitable institution or fund to which the donation was made.
• A copy of the approval certificate issued by the Central Government, in the case of donations to certain specified institutions or funds.

Q: Can I claim deduction under Section 80G for donations made in cash?

A: No, deduction under Section 80G is not allowed for donations made in cash. Donations must be made by cheque, draft, or online transfer.

Q: What is the due date for filing income tax returns for claiming deduction under Section 80G?

A: The due date for filing income tax returns for claiming deduction under Section 80G is July 31st of the following year.

Q: What are some of the other points to keep in mind while claiming deduction under Section 80G?

A: The following are some of the other points to keep in mind while claiming deduction under Section 80G:

• The donation must be made to a charitable institution or fund that is approved by the Central Government.
• The donation must be made in the name of the taxpayer who is claiming the deduction.
• The donation must be made during the financial year for which the deduction is being claimed.
• The taxpayer must have a valid receipt from the charitable institution or fund to which the donation was made.
• The taxpayer must file their income tax return on or before the due date.

Additional FAQ Questions

Q: What is the difference between Adjusted Gross Total Income (AGTI) and Gross Total Income (GTI)?

A: GTI is the total income of a taxpayer before making any deductions under the Income Tax Act. AGTI is the GTI after deducting certain specified items, such as losses from house property and capital gains.

Q: Which income is considered for calculating the GQA?

A: The GQA is calculated on the basis of GTI.

Q: Can I claim deduction under Section 80G for donations made to a relative?

A: Yes, you can claim deduction under Section 80G for donations made to a relative, provided that the relative is not a dependent of the taxpayer.

Q: Can I claim deduction under Section 80G for donations made to a political party?

A: No, you cannot claim deduction under Section 80G for donations made to a political party.

CASE LAWS

• Treatment of exempt income: Exempt income is not included in the computation of GQA. For example, in the case of ACIT v. M.B. Kedia (2008) 309 ITR 278 (Cal), the court held that the agricultural income of the assesses was not to be included in the computation of GQA.
• Treatment of losses: Losses incurred under any of the heads of income can be set off against the income from other heads of income while computing GQA. However, losses cannot be carried forward to subsequent years for the purpose of computing GQA.
• Treatment of clubbed income: Clubbed income is income that is deemed to be the income of the assesses even though it is actually earned by another person. Clubbed income is included in the computation of GQA. For example, in the case of ACIT v. Smt. Asha Rani (2012) 338 ITR 485 (Del), the court held that the income of the minor child was to be clubbed with the income of the parent while computing GQA.
• Treatment of deductions under Chapter VI-A: Deductions under Chapter VI-A of the Income Tax Act, 1961 are allowed from GQA to arrive at the taxable income. However, the aggregate number of deductions under Chapter VI-A cannot exceed QA.