CBDT allows deduction under section 80G for donation to Shri Ram Janmabhoomi Teerth Kshetra

cbdt-allows-deduction-under-section-80g-for-donation-to-shri-ram-janmabhoomi-teerth-kshetra


CBDT allows deduction under section 80G for donation to Shri Ram Janmabhoomi Teerth Kshetra: CBDT has issued a Notification No. 24/2020 dated 08.05.2020 to notify Shri Ram Janmabhoomi Teerth Kshetra as a place of historic importance and a place of public worship of renown for the purposes of section 80G(2)(b). The Permanent Account Number (PAN) of Shri Ram Janmabhoomi Teerth Kshetra trust is AAZTS6197B.

Section 80G allows a deduction for donation made to certain funds and charitable institutions from the gross total income before arriving at the total income of an assessee.

As per Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, any donation made up to June 30, 2020 shall qualify for claiming deduction from the income of the previous year 2019-20. However, this notification has been made effective from the financial year 2020-21 or AY 2021-22. As a result, any donation made to Shri Ram Janmabhoomi Teerth Kshetra till June 30, 2020 cannot be claimed in the financial year 2019-20.

Further, since the Shri Ram Janmabhoomi Teerth Kshetra is notified under section 80G(2)(b), the deduction shall be limited to 10 per cent of the adjusted gross total income of the assessee. The deduction shall be 100 per cent of the amount of donation to Shri Ram Janmabhoomi Teerth Kshetra, subject to 10 per cent of the adjusted gross total income of the assessee. The limit of deduction amount is, however, subject to gross total income. In other words, the deduction under section 80G cannot exceed the gross total income of the assessee.

What is Adjusted Gross Total Income? How to Compute Adjusted Gross Total Income for computing deduction under section 80G?
The Act does not use the term ‘Adjusted Gross Total Income’. This term is used by the author to clarify the concept aptly. Actually, it is nothing but the Gross Total Income computed for all the heads of income and as reduced by the followings-
(i) Any Long term capital gains, if any, included in the Gross Total Income,
(ii) Short Term Capital Gains chargeable u/s 111A, if any, if any, included in the Gross Total Income
(iii) All exempt income (From FY 2020-21, dividend income has been made taxable subsequent to abolishment of Dividend Distribution Tax or DDT u/s 115-O)
(iv) All permissible deduction under section 80CCC to 80U except deduction under this section 80G
(iv) Income referred to in sections 115A, 115AB, 115AC or 115 AD (related to non-residents/foreign company)
Read more on Income Tax Deductions here.
In other words, the Adjusted Gross Total Income is computed as below-
In other words, the Adjusted Gross Total Income is computed as below-
Heads of Income
Amount
(in Rs.)
Income from Salary
Xxx
Income from House Property
Xxx
Income from Business or Profession
Xxx
Income from Capital Gains- Any Long Term and Short Term Capital Gain
Xxx
Income from Other Sources
Xxx
Gross Total Income
Xxx
Less: Any Long Term Capital Gains
(-)Xxx
Less: Short Term Capital Gains chargeable u/s 111A
(-)Xxx
Less: Deduction u/s 80CCC to 80U except Deduction under section 80GG
(-)Xxx
Less: Income referred to in sec 115A, 115AB, 115AC or 115 AD
(related to non-residents/foreign company)
(-)Xxx
Adjusted Gross Total Income
Xxx

Illustration 1: Mr. Rakesh is a salaried individual. During FY 2020-21, his income from the salary is Rs. 4,00,000. His interest income from bank fixed deposits for the year is Rs. 5,000. He is eligible for deduction u/s 80C for Rs. 1,50,000. He has donated Rs. 10,000 to Shri Ram Janmabhoomi Teerth Kshetra.
Compute the amount of deduction under section 80G and the Total Income.
Particulars
Amount (Rs.)
Amount (Rs.)
Income from Salary
4,00,000
Less: Standard Deduction
50,000
3,50,000
Interest Income
5,000
Gross Total Income
3,55,000
Less: Deduction under chapter VI-A:
Section 80C
1,50,000
Adjusted Gross Total Income
2,05,000
Less: Deduction under section 80G
[Working Note 1]
10,000
Total Income
1,95,000

Working Note 1:
Particulars
Amount (Rs.)
Amount (Rs.)
(a) Adjusted Gross Total Income
2,05,000
Least of the followings-
(i) Amount of donation
10,000
(ii) 10% of Rs. 2,05,000
[as per (a)]
20,500
Amount of Donation
[100% of (i) or (ii), whichever is lower]
10,000
With the introduction of the new tax regime under the provisions of section 115BAC, no deduction including a deduction under section 80G can be claimed. Hence, if an individual opts for the new tax regime, no deduction for donation under section 80G can be claimed. However, this provision is applicable from the financial year 2020-21 (AY 2021-22). The deduction under section 80G for donation to Shri Ram Janmabhoomi Teerth Kshetra shall be available only if the assessee opts for the old tax regime.

Similarly, a domestic company which opted to pay concessional rate of tax under section 115BAA and section 115BAB is allowed to claim deduction under section 80G by the Finance Act, 2020. This is applicable for FY 2019-20 (or AY 2020-21). Form AY 2021-22, such a company cannot claim deduction under section 80G as per amendment by Finance Act, 2020.

For the FY 2019-20, there is no choice and only the old tax regime applies. But since the notification is made effective from FY 2020-21, hence, the deduction for donation made to Shri Ram Janmabhoomi Teerth Kshetra till June 30, 2020 cannot be claimed for the FY 2019-20.

It should be kept in mind that there is an amendment brought in by the Finance Act, 2020 which provides for allowability of deduction u/s 80G based on the online amount of donation in Form 26AS which will be furnished by the Trust to the income tax department.

After the verdict of Supreme Court on November 9, 2019, Shri Ram Janmabhoomi Teerth Kshetra was set-up as a ‘Trust’ to construct a Ram temple in Ayodhya, Uttar Pradesh.



Read the full text of the Notification No. 24/2020 dated 08.05.2020.


MINISTRY OF FINANCE
(Department of Revenue)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION

New Delhi, the 8th May, 2020

INCOME-TAX


S.O. 1434(E).—In the exercise of the powers conferred by clause (b) of sub-section (2) of section 80G of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies “SHRI RAM JANMABHOOMI TEERTH KSHETRA” (PAN: AAZTS6197B) to be place of historic importance and a place of public worship of renown for the purposes of the said section from the year F.Y. 2020-2021, relevant to the Assessment Year 2021-2022.


[Notification No. 24/2020/F. No. 176/8/2017/ITA-I]

PRAJNA PARAMITA, Director

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