Deduction u/s 80 g

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manik

ca in practice

213 Points Posted on 05 March 2013

one of our clients ( a company ) has also set up a charitable hospital under a trust , apart from making donation , they also purchase medicines in their own name (in compay's name) and provide them to the hospital. my question is

1.)whether they can claim deduction u/s 80g in regards to value of medicines provided??

2.)what will be the accounting entries both in the books of co. and trust??

Replies (6)

Pawan Mittal

CA Final

444 Points Posted on 05 March 2013

All donations are not eligible for deductions only donations made to specified institutions are eligible u/s 80G.

As per section 80G donation exceeding Rs. 10000 will be eligible for deduction only if it is paid by a mode other than cash. Therefore in your case you are giving donation in the form of medicines so you should be eligible for deduction but don't forget to take the receipt from the charitable institution on which the registration no. should be printed.

If the aggregate of sums donated exceed 10% of Gross Total Income than donation in excess of 10% of adjusted GTI will not be eligible for deduction.

entries for the company will be:

Medicines a/c Dr.

To cash a/c

P&L a/c Dr.

To Medicines a/c

entries