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80g deduction.. help?

Ankit Gupta (CA FINAL) (553 Points)

03 September 2015

Hello, please compute from the following information, deduction u/s 80G allowable in case of firms..i am facing difficulties. Net profit before partners interest and salary=1534936.69 Donation to approved institution- 51000 Net profit after interest and salary= 277022.69 there is no LTCG,STCG.

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CA PARTH SHAH (In Practice) (1951 Points)
Replied 05 September 2015

What the issue here.

Deduction u/s 80G is allowed upto 10% of GTI which comes to Rs Rs 27,702. Deduction eligible is Rs 50% of Rs 51000 which comes to 25,500. SO claim deductiom of Rs 25500

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Dhawal Mohnot (Practicing) (449 Points)
Replied 05 September 2015

50% of 10% of GTI (Assuming it falls under 50% category). It should be 13,851. In my view.

CA PARTH SHAH (In Practice) (1951 Points)
Replied 05 September 2015

Well Act has capped limit on 10% on adjusted GTI. 50% is the limit is on the deduction of donation and not on GTI.

Dhawal Mohnot (Practicing) (449 Points)
Replied 05 September 2015

Maximum permissible donation is 10% of AGTI, and that is not allowed in full, you have to deduct based on qualifying limit.

Rashi Bajaj (CA) (752 Points)
Replied 05 September 2015

Presuming you fall under the general(restricted 50%) category, your deduction amount would be restricted to 50% of 51000/-, i.e. 25500 which is within the limit of 10% of ATI. i.e.27,702/-

So claim 25500/- u/s 80G

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Dhawal Mohnot (Practicing) (449 Points)
Replied 05 September 2015

Disagree

Maximum permissible donation is 10% of ATI or actual donation (Whichever is less). Thereafter 50% is applied on whichever is less.

Rashi Bajaj (CA) (752 Points)
Replied 05 September 2015

Dhawal could you plz quote the exact clause?

Dhawal Mohnot (Practicing) (449 Points)
Replied 05 September 2015

80G(4)

Assume 10% ATI is 100 and donation is 100. We would claim 50 as 80G. Since donation amount does not exceed 10% of ATI.

Now assume 10% of ATI 90 and donation is 100, are you saying that you would claim 90 as deduction???? Eveen if it falls under qualifying limit of 50%?

10% of ATI is the calculation for maximum permissible donation not the qualifying deduction amount.

If still not convinced, put the above example in ITR.

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CA PARTH SHAH (In Practice) (1951 Points)
Replied 05 September 2015

Disagree.

50% is applicable to donation amount. First the amount of deduction is decided. so 50% of the donation is taken into consideration. THen it is compared with 10% of GTI. Whichever is lower is allowed as deduction.