Section 80G of income tax act allows tax deductions on donations made to certain organizations and relief funds. This deduction encourages taxpayers to donate and avail the satisfaction of giving back to the community along with a reduction in their tax liability.
- What is Section 80G Deduction?
- What is the Eligible Mode of Payment?
- How to Claim Deduction Under Section 80G?
- What is 80G Deduction Limit?
- List of Funds Eligible for Deduction Under Section 80G
- Donations with 100% Income Tax Deduction without any qualifying limit:
- Donations with 50% Income Tax Deduction without any qualifying limit:
- Donations with 100% Income Tax Deduction subject to qualifying limit of 10% of adjusted gross total income:
- Donations with 50% Income Tax Deduction subject to qualifying limit of 10% of adjusted gross total income
- What is Adjusted Gross Total Income for 80G?
- ITR Form Applicable for Section 80G
What is Section 80G Deduction?
Section 80G of income tax act allows a deduction for any contribution made to certain relief funds and charitable institutions. This deduction can be claimed by all types of taxpayers (including NRIs), i.e., individuals, HUFs, companies, firms, or any other person. However, not all donations are eligible for 80G Deduction. Only donations made to prescribed funds by the Government of India qualify as a deduction.
What is the Eligible Mode of Payment?
The mode of payment is an important factor that determines the eligibility for 80G deduction. The deduction can only be claimed when the mode of payment is via cash, cheque, or demand draft.
However, as per the last amendment, from FY 2017-18 onwards, contributions in cash exceeding INR 2000 will not be deductible as a deduction. Hence, contributions exceeding INR 2,000 should be made via cheque or demand draft to claim the deduction.
Note: Previously the limit for cash donations was INR 10,000.
Moreover, donations in the form of food, clothes, or medicines do not qualify for deduction under section 80G of income tax act.
How to Claim Deduction Under Section 80G?
In order to claim 80G deduction, one needs to furnish the following details while filing the income tax return:
- Name of Donee
- PAN of Donee
- Address of Donee
- Amount Donated
- Donation Type (Name of Charitable institution or Fund along with qualifying limit category)
Note: A deduction under Section 80G of income tax act is not allowed if the taxpayer opts for the new tax regime.
What is 80G Deduction Limit?
The below chart explains the 80G deduction limit:
List of Funds Eligible for Deduction Under Section 80G
Donations with 100% Income Tax Deduction without any qualifying limit:
- National Defense Fund set up by the Central Government
- Prime Minister’s National Relief Fund
- National Foundation for Communal Harmony
- An approved university/educational institution of National Eminence
- Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
- Fund set up by a State Government for the medical relief to the poor
- National Illness Assistance Fund
- National Blood Transfusion Council or to any State Blood Transfusion Council
- Fund for Technology Development and Application
- National Sports Fund
- National Cultural Fund
- The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
- National Children’s Fund
- Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
- National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities
- The Maharashtra Chief Minister’s Relief Fund during October 1, 1993, and October 6, 1993
- Chief Minister’s Earthquake Relief Fund, Maharashtra
- Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of the earthquake in Gujarat
- Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of the earthquake in Gujarat (contribution made during January 26, 2001, and September 30, 2001) or
- Prime Minister’s Armenia Earthquake Relief Fund
- Africa (Public Contributions — India) Fund
- Swachh Bharat Kosh (applicable from the financial year 2014-15)
- Clean Ganga Fund (applicable from the financial year 2014-15)
- National Fund for Control of Drug Abuse (applicable from the financial year 2015-16)
Donations with 50% Income Tax Deduction without any qualifying limit:
- Jawaharlal Nehru Memorial Fund
- Prime Minister’s Drought Relief Fund
- Indira Gandhi Memorial Trust
- The Rajiv Gandhi Foundation
Donations with 100% Income Tax Deduction subject to qualifying limit of 10% of adjusted gross total income:
- Government or any approved local authority, institution, or association to be utilized for the purpose of promoting family planning
- Donation by a Company to the Indian Olympic Association or to any other notified association or institution established in India for the development of infrastructure for sports and games in India or the sponsorship of sports and games in India
Donations with 50% Income Tax Deduction subject to qualifying limit of 10% of adjusted gross total income
- Donation to any public charitable trust
- Any authority constituted in India for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development, or improvement of cities, towns, villages or both
- Any corporation referred in Section 10(26BB) for promoting the interest of minority community
- For repairs or renovation of any notified temple, Mosque, Gurudwara, Church, or another place
- Any other fund or any institution which satisfies conditions mentioned in Section 80G(5)
What is Adjusted Gross Total Income for 80G?
The taxpayer needs to calculate the adjusted gross total income for donations made to charity or trust, which are subject to the qualifying limit. For calculating “Adjusted Gross Total Income,” one needs to first calculate the gross total income earned from all the sources and subtract the following from it:
|Gross Total Income||xxx|
|Less: Chapter VI-A Deductions except 80G||(xxx)|
|Less: Exempt Income||(xxx)|
|Less: Income chargeable to tax at special rate||(xxx)|
|Less: Income referred to in Sections 115A, 115AB, 115AC, and 115AD relating to non-residents and foreign companies.||(xxx)|
|Adjusted Total Income||xxx|
Let us take an example to understand the calculation better:
Raj contributed INR 25,000 to a government-approved institution for promoting family planning. (100% tax deduction allowed to a qualifying limit of 10% ATI)
Further, he contributed INR 40,000 towards the renovation of a temple (50% tax deduction allowed to a qualifying limit of 10% ATI)
He calculated his adjusted total income as INR 4,50,000.
|Donation with 100% tax deduction qualifying limit||25,000|
|Donation with 50% tax deduction qualifying limit||40,000|
|10% of ATI||45,000 |
ITR Form Applicable for Section 80G
The taxpayer can claim a deduction under section 80G of income tax act while filing ITR if all the above-mentioned conditions are fulfilled. They can claim 80G in any of the ITR forms, i.e, ITR 1, ITR 2, ITR 3, and ITR 4 depending upon their income sources.
- Stamped Receipt: A stamped receipt for the donations made. Whenever a donation is made towards a fund or a trust, they must give a receipt. Keep it safe to support the claim of the deduction. The receipts should contain the stamp of the organization, name, date, and PAN.
- Form 58: For donations made towards funds with 100% exemptions, a Form 58 from the organization is also necessary.
No. As per the Income Tax Act, any cash contribution in excess of INR 2,000 will not be allowed as a deduction under Section 80G.
80G deduction is allowed to all taxpayers irrespective of their residential status. Hence, as long as you have a taxable income to claim a deduction from, you can take the benefit of 80G.
Yes. This deduction can be claimed by all types of taxpayers, i.e., individuals, HUFs, companies, firms, or any other person.
Yes. There are no limits for contributions made through cheques.