Opinion Of Eminent Legal Luminaries On Controversial Issues

Can Donation U/s. 80G Be Made By Cash?

QUERY: Whether limit of Rs. 10,000/- for payment by cheque applies to each item of donation to the same trust or aggregate during one financial year?
ANSWER: (i) The Explanation 5 to section 80G which is on statute book since assessment year 1976-77 which provides that “no deduction shall be allowed under this section in respect of any donation unless such donation is of a sum of money”. This is to clarify that no deduction is allowed u/s. 80G unless donation is a sum of money, i.e. to say, it is made in cash or by cheque or bank draft and not in kind.

(ii) Now, sub-section (5D) to section 80G has been inserted by the Finance Act, 2012 w.e.f. April 1, 2013 i.e. from assessment year 2013-14, which provides that, “no deduction shall be allowed under this section in respect of donation of any sum exceeding ten thousand rupees unless such sum is paid by any mode other than cash”. So, any donation paid by cash shall be allowed as deduction if the sum does not exceed Rs.10,000/-

(iii) Thus, up to Rs. 10,000/- a donation can be made in cash, but above Rs. 10,000/- a donation has to be made by cheque. So limit of Rs. 10,000/- by cheque is applicable to each item of donation.

Posted in Income-tax

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