Section 80G Deduction: Donations Eligible Under Section 80G

What is Section 80G of the Income Tax Act?

Section 80G of the Income Tax Act provides for a deduction for donations made to certain charitable institutions or funds. The deduction is available to individuals as well as companies.

The deduction under section 80G can be claimed on the amount donated to eligible institutions or funds. The deduction can be claimed up to a maximum of 50% or 100% of the donated amount, depending on the institution or fund to which the donation under 80G has been made.

However, it is important to note that not all donations under 80G are eligible for deduction under section 80G. Only donations made to certain specified funds or institutions are eligible for deduction. It is, therefore, important to check whether the institution or fund to which the donation has been made is eligible for deduction under section 80G.

To claim the deduction under section 80G, the taxpayer must obtain a receipt or 80G deduction limit certificate from the institution or fund to which the donation has been made.

The receipt should contain the name and address and PAN no.of the institution or fund, the amount donated, and the registration number of the institution or fund under section 80G.

However, you will not be eligible to claim the deduction if you have any income or loss from a profession or a business.

What is a Section 80G Tax Exemption?

Section 80G of the Indian Income Tax Act allows you to claim tax deductions on donations made to eligible charitable institutions. By donating, you can reduce your taxable income and, in turn, lower your total tax payable. Section 80G tax deduction can be claimed by any charitable trust, NGO, ot organization involved in charitable activities, including education and religious institutions. You can claim either a 50% or a 100% deduction for the donated amount depending on the institution to which you have contributed.

Eligibility to Claim Deduction Under Section 80G

Both company and non-company can claim a deduction under Section 80G of the Income Tax Act for donations made to eligible charitable institutions or funds.

The following persons can claim deduction under section 80G -

• Individuals
• Companies
• Firms
• Hindu Undivided Family (HUF)
• Non-Resident Indian (NRI)
• Any other person

It is important to note that only the donations made to prescribed funds qualify as a deduction. Also, this deduction is not available for those individuals who opt for the new regime.

What Type of Donations are Eligible for the Deduction Under Section 80G and 80GGA?

To claim a deduction under Section 80G, the donation must be in the form of money and not goods or services. The deduction can only be claimed for cash, cheque, or electronic transfer donations.

In addition, it is important to note that donations made in cash exceeding Rs. 2,000 will not be eligible for the deduction under Section 80G. Donors should ensure that they receive a receipt for the donation. The receipt should specify the amount donated, the name and address of the charitable institution or fund, and the registration number of the institution or fund under Section 80G.

Donors should also check the eligibility and maximum 80G deduction limit for each institution or fund before donating. It is important to note that the deduction limit and eligibility criteria can vary depending on the institution or fund to which the donation has been made.

Types of Deductions Under Section 80G

Donations made to eligible trusts and charities qualify for tax deductions under certain conditions. Under Section 80G, these donations fall into four categories:

• 100% Deduction (No Limit) – Donations to funds like the National Defense Fund, Prime Minister’s National Relief Fund, National Foundation for Communal Harmony, and National/State Blood Transfusion Council qualify for a full 100% tax deduction without any limit.
• 50% Deduction (No Limit) – Donations to trusts such as the Prime Minister’s Drought Relief Fund, National Children’s Fund, and Indira Gandhi Memorial Fund qualify for a 50% tax deduction without any limit.
• 100% Deduction (Limited to 10% of Adjusted Gross Total Income) – Donations to local authorities or the government for family planning initiatives, as well as contributions to the Indian Olympic Association, qualify for a 100% deduction. However, the deduction is limited to 10% of the donor’s Adjusted Gross Total Income. Any amount exceeding this limit is not deductible.
• 50% Deduction (Limited to 10% of Adjusted Gross Total Income) – Donations to local authorities or the government for charitable purposes qualify for a 50% tax deduction. The deduction is capped at 10% of the donor’s Adjusted Gross Total Income. Any amount beyond this limit is not deductible.

Scope of Deduction Under Section 80G

To qualify for a tax deduction under Section 80G, donations must meet certain basic criteria. Key requirements include:

• Donations must be made from taxable or exempted income. Contributions from non-taxable income sources do not qualify for deductions.
• Only cash and cheque donations are eligible. Donations in kind, such as clothes, food, or medicines, do not qualify under Section 80G.
• Only companies can claim deductions for donations made to the Indian Olympic Association.
• Donations must be made to valid and registered trusts to be eligible for deductions.
• Contributions to foreign institutions and political parties do not qualify for deductions.

How to Claim a Deduction Under Section 80G for Donations Made to Ayodhya Ram Mandir Trust?

People worldwide donated to the Ram Mandir through the Shri Ram Janmabhoomi Teerth Kshetra Trust, registered under Section 80G. This provision in the Indian Income Tax Act allows donors to claim deductions.

• 50% of the amount donated for renovation/repair of the Mandir to Shri Ram Trust is eligible for deduction under Section 80G.
• If the total amount donated to Shri Ram Trust exceeds 10% of your adjusted gross total income (GTI), any excess amount beyond the 10% limit will not be eligible for deduction.

Points to be noted while claiming deduction

• Secure a valid Ram Mandir donation receipt from Shri Ram Trust.
• Donations can be made via drafts, cheques, or online modes.
• Cash donations exceeding INR 2,000 are not deductible.
• In-kind donations are not accepted.
• Donors opting for the new tax regime cannot claim benefits.
• Contributions must be designated for temple renovation/repair to qualify for deductions.
• Provide details of the donation in Schedule 80G of your ITR form.

Have more questions on how to claim the deduction on the money donated? Talk to our tax experts

How to Claim the Deduction Under Section 80G While Filing ITR?

Tax calculation or tax liability is computed on the net taxable income of the taxpayer. The net taxable income is calculated after subtracting all the deductions that a taxpayer is eligible for from his/her gross total income. This means that the deduction under Section 80G will be deducted from the gross total income. Gross income is the sum of income from all sources of income, such as salary, dividend income, capital gains, interest income, rental income, etc.

Now the question is how much amount of deductions can be claimed under Section 80G. This deduction ranges from 50% to 100% of the amount donated. Donations to certain institutions qualify for a full deduction of either 100% or 50% without any qualifying limit.

To claim the deductions under Section 80 G, one needs to provide the details of their donations in’ Schedule 80G” in the ITR form. Tables A, B, C, and D are included in the schedule. These tables each correspond to a different category of charitable institution.

As per the latest change, a new column has been added under ‘Table D’ of ITR forms where disclosure of the ARN (donation reference number) is required to be entered. This one is for those entities where a 50% deduction is allowed, subject to the qualifying limit.

Along with mentioning the information under ‘Schedule 80G’, it is important to separately mention the total amount of deduction claimed under Section 80G if the taxpayer is filling the ITR forms 2 and 3.

To claim the deduction under section 80G, you need to fill in the following details in the Income Tax Return -

• Name of the Donee
• PAN of the Donee
• Address of the Donee
• The amount and breakup of contributions are in cash and other mode.
• The amount of deduction

These details are required to be mentioned in the various tables given in the ITR -

Table A - It is for the donations eligible for a 100% deduction without any qualifying limit.

Table B - It is for donations eligible for a 50% deduction without any qualifying limit.

Table C - It is for donations eligible for a 100% deduction with a qualifying limit.

Table D - It is for donations eligible for a 50% deduction with a qualifying limit.

What is “Adjusted Gross Total Income” for Tax Exemption Calculation Under 80G?

The term "adjusted gross total income" refers to the gross total income, which includes income from various sources before applying deductions under Chapter VI-A. It is calculated after reducing the following:

• Deductions allowed under Sections 80CCC to 80U (excluding Section 80G).
• Exempt income under Section 10 of the Income Tax Act.
• Long-term capital gains.
• Short-term capital gains taxed at 20% under Section 111A.
• Income covered under Sections 115A, 115AB, 115AC, and 115AD, which apply to non-residents and foreign companies.

What Documents are Required to Claim Tax Deduction Under Section 80G?

To claim a deduction under Section 80G, individuals must have the following documents as proof:

• Duly Stamped Receipt – A receipt from the trust or charity receiving the donation is mandatory. It should include the trust’s name, address, PAN number, donation amount, and donor’s name.
• Form 58 – Required for claiming a 100% deduction. Without this form, the donation will not qualify for a full deduction.
• Trust’s Registration Number on the Receipt – The receipt must mention the trust’s valid registration number issued by the Income Tax Department. The registration must be valid on the date of the donation; otherwise, the deduction may not be allowed.
• Photocopy of the 80G Certificate – Donors should request a copy of the trust’s 80G certificate when receiving the donation receipt.

How Much Deduction is Allowed Under Section 80G?

For individuals, the deduction under Section 80G can be claimed on the amount donated to eligible institutions or funds up to a maximum of 50% or 100% of the donated amount, depending on the institution or fund to which the donation has been made.

For companies, the deduction under Section 80G can be claimed on the amount donated to eligible institutions or funds up to a maximum of 50% or 100% of the donated amount. However, it is important to note that the deduction limit for companies is subject to certain conditions and restrictions.

Additionally, this deduction under Section 80G can only be claimed by taxpayers who have opted for the old tax regime.

How to Calculate the Amount of Deduction Under Section 80G of the Income Tax?

Section 80G broadly categorizes donations under 2 categories. First, donations without any qualifying limit & second, donations with a qualifying limit.

These two categories further have sub-categories. You can refer to the diagram below for more clarity.

*Maximum limit is known as the qualifying amount.

To calculate the amount of deduction under 80G, follow these steps:

• Check the category in which the fund/charitable institution falls (100% or 50% deduction with or without maximum/qualifying limit). We have given the complete list below for your reference.
• When the payment is made to the first category, then there is no need for further calculations; just claim 100% or 50% of the donation amount subject to taxable income.
• When payment is made to the second category, you need to find out the maximum/qualifying limit. The maximum/qualifying limit is 10% of the “adjusted gross total income.”
• Now use this formula to arrive at the amount of deduction =
  a) Gross Qualifying limit = All donations made to Category 2
  b) Net Qualifying limit = This is 10% of the “adjusted gross total income.”
  c) Amount Deductible = 100%/50% of the donation amount subject to the net qualifying limit.

What is the Mode of Payment Under Section 80G?

Taxpayers in India can claim deductions under Section 80G for eligible donations. Here are the key modes through which donations can be made:

Cheque: Donations made via cheque are eligible for Section 80G deductions limit.

Demand Draft: Contributions made through demand drafts also qualify for Section 80G benefits.

Cash (for donations below Rs 2,000): Cash donations are accepted for deductions if they are below Rs 2,000.

Note: In-kind contributions such as food, material, clothes, medicines, etc., and donations exceeding Rs 2,000 should not be in cash to qualify for Section 80G deductions limit.

Example to Explain the Calculation of the Amount of Deduction Under Section 80G

Example: Mr. X, an individual, has income chargeable under the head salary of Rs.10,00,000 & a short-term capital gain of Rs.1,00,000. He makes the following investments & donations to save taxes.

Now, let’s see how Mr. X can claim deductions from various investments & donations made by him.

First of all, we will calculate Adjusted GTI as below:

As a next step, we will calculate the net qualifying Limit (i.e., 10% of INR 8,50,000) which comes to 85,000.

Further, we will classify the donations into two categories below:-

Without Qualifying Limit

Eligible List of Funds/Charitable Institutions for Donations

Donations Eligible for 100% Deduction (Without Qualifying Limit) -

• National Defence Fund (Central Government).
• Prime Minister’s National Relief Fund.
• National Foundation for Communal Harmony.
• Approved universities/educational institutions of national eminence.
• Zila Saksharta Samiti (District Collector’s chairmanship).
• State government fund for medical relief to the poor.
• National Illness Assistance Fund.
• National or State Blood Transfusion Councils.
• National Trust for Welfare of Persons with Autism, Cerebral Palsy, etc.
• National Sports Fund.
• National Cultural Fund.
• Fund for Technology Development and Application.
• National Children’s Fund.
• Chief Minister’s or Lieutenant Governor’s Relief Fund (States/UTs).
• Armed Forces Welfare Funds (Army, Navy, Air Force).
• Various relief funds, such as:
  • Andhra Pradesh Cyclone Relief Fund (1996).
  • Maharashtra Chief Minister’s Relief Fund (1993).
  • Chief Minister’s Earthquake Relief Fund (Maharashtra).
  • Gujarat Earthquake Relief Fund (2001).
• Prime Minister’s Armenia Earthquake Relief Fund.
• Africa (Public Contributions – India) Fund.
• Swachh Bharat Kosh (from FY 2014-15).
• Clean Ganga Fund (from FY 2014-15).
• National Fund for Control of Drug Abuse (from FY 2015-16).

Donations Eligible for 50% Deduction (Without Qualifying Limit) -

• Prime Minister’s Drought Relief Fund.

Donations Eligible for 100% Deduction (Subject to 10% of Adjusted Gross Total Income) -

• Contributions to government/approved authorities for family planning promotion.
• Donations by companies to:
  • Indian Olympic Association.
  • Other notified institutions for developing or sponsoring sports infrastructure in India.

Donations Eligible for 50% Deduction (Subject to 10% of Adjusted Gross Total Income) -

• Contributions to any other fund/institution satisfying Section 80G(5) conditions.
• Donations to the government/local authorities for charitable purposes (excluding family planning).
• Contributions to housing/accommodation authorities for urban or rural development.
• Donations to corporations under Section 10(26BB) for minority community welfare.
• Funds for repair or renovation of notified places of worship (temples, mosques, gurudwaras, churches, etc.).
• Donation made to Ayodhya Ram mandir Trust

80G Deduction Under New Tax Regime

Deduction for donations made to specified charitable institutions or funds is only available under the old tax regime. Taxpayers opting for the new tax regime cannot claim the deduction under section 80G.

What is Section 80GG?

Section 80GGA of the Income Tax Act, 1961, provides a significant tax benefit for taxpayers in India. It allows for a 100% deduction on donations made towards specific scientific research and rural development initiatives.

Here's a breakdown of key points about Section 80GGA:

Deduction Percentage: You can claim a deduction for the entire amount donated.

Payment Mode: Donations must be made through valid modes like cheques, drafts, or online transfers. Cash donations exceeding Rs. 2,000 are not eligible for deduction.

Who Can Claim: This deduction is available to all taxpayers except those with income from business or profession taxpayers opting for the new tax regime (Section 115BAC).

Eligible Donations:

• Payments to research associations, colleges, universities, or institutions for scientific research (approved under Section 35(1)(ii)).
• Contributions to research associations, colleges, universities, or institutions for social science or statistical research (approved under Section 35(1)(iii)).
• Donations to approved associations or institutions for rural development programs (Section 35CCA).
• Contributions to approved associations or institutions for training people to implement rural development programs.
• Payments to public sector companies, local authorities, or approved associations/institutions for approved projects or schemes (Section 35AC).
• Donations to the Rural Development Fund (notified).
• Contributions to the Fund for Afforestation (notified).
• Payments to the National Poverty Eradication Fund (notified).

Things to Remember When Claiming Section 80G Deduction

If you're planning to claim tax benefits under Section 80G of the Income Tax Act, here are some key points to keep in mind:

• Verify Eligibility
  Ensure that the organization you're donating to is eligible under Section 80G as per the Income Tax Department. Donations made to ineligible institutions do not qualify for any tax benefits.
• Keep the Required Documents
  Always collect and retain essential documents like a stamped donation receipt or Form 58 (if applicable). These documents are crucial for validating your claim in case of an income tax notice or audit.
• Follow the Rules for Cash Donations
  Donations made in cash exceeding ₹2,000 are not eligible for deductions under Section 80G. For contributions above this amount, use alternative payment modes such as:
  • Cheque
  • Demand Draft
  • Electronic transfers (e.g., NEFT, UPI, bank transfer)

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