Section 80G Deduction: How to claim Section 80G deductions while filing ITR
The Indian government introduced Section 80G of the Income Tax Act to encourage assesseeto donate to charitable institutions or funds. Under this section, assessee can claim a deduction on the amount donated to eligible institutions or funds, thereby reducing their taxable income.
The government provides this incentive to encourage charitable donations and support the activities of charitable organizations, which can benefit society as a whole. By providing tax benefits to donors, the government hopes to encourage more people to donate to charitable causes.
Budget 2023 Update for deductions under Section 80G
As per the latest announcement in budget 2023, the donations made to the following funds will not be eligible for deductions under Section 80G:-
- Jawaharlal Nehru Memorial Fund
- Indira Gandhi Memorial Trust
- Rajiv Gandhi Foundation The Finance bill page 47
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 has been made.
However, it is important to note that not all donations 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 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.
Who can claim a deduction under Section 80G?
Both company or non companycan claim a deduction under Section 80G of the Income Tax Act for donations made to eligible charitable institutions or funds.
What type of donations are eligible for the deduction under section 80G?
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 limit for deduction 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.
How to claim the deduction under Section 80G while filing ITR?
Claiming Section 80G deduction at the time of filing ITR can be complex, let us make it simple for you by helping you in how it is calculated.
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 deduction under Section 80G will be deducted from the gross total income. The gross total 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 deduction. 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. Also, in some cases, the deduction is limited to 10% of the taxpayer's adjusted gross total income.
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What is “Adjusted Gross Total Income” for tax exemption calculation under 80G?
Adjusted Gross Total Income in this regard means the sum total of your income under all heads less the following amounts:
- Amount deductible u/s 80C to 80U (but not Section 80G)
- Income on which income tax is not payable
- Long-term capital gains
- Short term capital gains under Section 111A
- Income referred to in Sections 115A, 115AB, 115AC, or 115AD.
What Documents are required to Claim tax deduction under Section 80G?
- Receipt: To claim deduction u/s 80G, you need a donation receipt to back your claim. The receipt should provide details like Name, Address, PAN, registration number of the trust & the name of the donor as well as the amount of donation and mode of payment.
- Registration No. of Trust on Receipt: Every trust registered with the IT department u/s 80G has a Registration Number. It is mandatory to mention that number on the receipt. This registration is valid for a limited period only. Hence, the receipt must mention the registration number and the validity period.
- Photocopy of 80G certificate: While getting a receipt, you should insist on a photocopy of the trust’s 80G registration certificate.
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 limit on the deduction 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 2 categories further have sub-categories. You can refer to the diagram below for more clarity.
*Maximum limit is known as the qualifying amount.
For calculating the amount of deduction under 80 G, 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.
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 investment & donations to save taxes.
|Investment in NSCs & Tax saving FDRs||Rs.150,000|
|Contribution to National Defence Fund||Rs.8,000|
|Clean Ganga Fund||Rs.3,000|
|National Illness Assistance Fund||Rs.7,000|
|National Cultural Fund||Rs.15,000|
|Paid to State Government for Family Planning||Rs.70,000|
|Paid to Approved Charitable Institution||Rs.60,000|
Now, let’s see how Mr X can claim deductions of various investments & donations made by him.
First of all, we will calculate Adjusted GTI as below:
|Income from salary -||10,00,000|
|Income from short terms Capital Gain||1,00,000|
|Gross Total Income||11,00,000|
|Less: short-term capital gain||-1,00,000|
|Less: Investment in NSCs||-150,000|
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 2 categories as below:-
Without Qualifying Limit
|Donation Made to||Amt.|
|Total A (1+2+3+4)||33,000|
|With qualifying Limit|
|Donation Made to||Amt.|
|(5) Paid to State Government for Family Planning (100% of 70,000)||70,000|
|(6) Paid to Approved Charitable Institution (50%of 60,000)||30,000|
|Total B (5+6) 1,00,000 (Restricted to 85,000 only)|
|Hence deduction u/s 80 G will be limited to 1,18,000|
Section 80G Deduction: Eligible List of funds/Charitable Institutions for donations
The prescribed funds and charitable institutions are divided into two categories:
Category 1: Donations where the deduction is available without any qualifying limit. This is further sub-categorized in funds with
- :- 100% deduction without qualifying limit and
- :- 50% deduction without qualifying limit
Category 2: Donations where deduction available is subject to qualifying limit. This is further sub-categorized into funds with
- :- 100% deduction subject to qualifying limit and
- :- 50% deduction subject to qualifying limit
Category 1.1: Funds that give 100% deduction and without any qualifying limit
|National Defence Fund||Prime Minister’s National Relief Fund||Prime Minister’s Armenia Earthquake Relief Fund||Africa (Public Contribution-India) Fund||National Children’s Fund|
|National Foundation for Communal Harmony||A university or any other educational institute of national eminence as may be approved by the prescribed authority.||Maharashtra Chief Minister’s Earthquake Relief Fund||Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of the earthquake in Gujarat||Zila Saksharta Samiti constituted in Gujarat|
|National Blood Transfusion Council or State Blood Transfusion Council||Fund set up by a State Govt. for the medical relief of the poor.||Central Welfare Fund of the Army & Air Force or the Indian Naval Benevolent Fund||National Illness Assistance Fund||Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund|
|National Sports Fund set up by the CG||National Cultural Fund set up by the CG||Fund for Technology Development and Application set up by the CG||Andhra Pradesh Chief Minister’s Cyclone Relief Fund||National Welfare Trust for persons with Autism, Cerebral Palsy, Mental retardation and multiple disabilities|
|Swachh Bharat Kosh (Available to all assessees)||Clean Ganga Fund set up by the CG (Available to resident assessee)||National Fund for Control of Drug Abuse|
Category 1.2: Funds that give 50% deduction without any qualifying limit.
|FUND NAME||DEDUCTION ALLOWED|
|Prime Minister’s Drought Relief Fund||50%|
Category 2.1 : Funds that give 100% deduction and are subject to qualifying/maximum limit (ceiling of 10% of adjusted gross total income)
|FUND NAME||DEDUCTION ALLOWED|
|Govt. or any approved local authority, institution or association to be utilized for promoting family planning||100%|
|The Indian Olympic Association or to any other notified association or institution for the development of infrastructure for development of sports and games in India or sponsorship of sports and games (Note: this deduction is only available to companies)||100%|
Category 2.2: Funds that give 50% deduction and are subject to qualifying limit (ceiling of 10% of adjusted gross total income)
|FUND NAME||DEDUCTION ALLOWED|
|Any other approved fund or institution which satisfies the conditions mentioned in section 80G(5)||50%|
|Govt. or any local authority, institution or association to be utilized for any charity purpose other than the purpose of promoting family planning||50%|
|An authority constituted in India for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning development of towns, villages, etc.||50%|
|A corporation specified in section 10(26BB) for promoting the interest of minority community||50%|
|Any notified temple, mosque, gurudwara, church, or other place notified by the CG (for renovation or repair)||50%|
What points should I keep in mind for claiming this deduction?
Some points to be kept in mind while claiming deduction u/s 80G are as follows:
- If you make any donation to a foreign trust then no deduction u/s 80G will be allowed.
- Any donation made to political parties, like souvenirs, pamphlets, etc, will not be eligible for deduction under this section. Although contributions (other than cash) to political parties are eligible for deduction u/s 80GGB & 80GGC. For more detail, refer to our guide.
- All donations do not enjoy deduction u/s 80G. Donations made to only specified funds are eligible, the names of which are enlisted above.
- A taxpayer can claim a deduction in respect of donations to certain funds/ institutions under section 80G. For claiming a deduction, a donor should not forget to take the donation receipt containing the name, PAN, address, and registration number of the donee, along with the donor's name, amount donated, and mode of payment. As the details of the donation would be required to be entered while filing ITR. Donations should be paid by any mode other than cash in case the amount of donation exceeds Rs.2000/-
Frequently Asked Questions
Q- Can I claim an 80G through my employer?
Yes, you can claim a deduction u/s 80G through your employer. For that, you will need a certificate from the employer stating that such a donation has been made from your salary.
Q- Do I need to submit the receipt of my donation to claim a deduction under Section 80G?
No, you do not have to submit the receipt while filing an ITR. However, it is advised to keep it safe & handy so that it can be furnished in front of the Assessing Officer if required during the assessment.
Q- Is there any specific format for the 80G donation receipt? Where can I get the donation receipt?
The Income Tax Department issues no specific donation receipt format. The only requirement is the mention of the Trust name, address, registration number, PAN, donation amount in words and figures, date of donation, name of the donor, and mode of payment.
Also, the receipt should specify that the donation is eligible for deduction u/s 80G.
The donation receipt will be provided by the donee (Trust)
Q- What will be the payment proof in case the employer makes a donation through a consolidated cheque?
In this scenario, the deduction will be allowed based on a certificate issued by employers or DDO (Drawing and Disbursing Officer).
Q- Can I claim a tax deduction under 80G on all types of my income, like capital gains, salary income, rental income, etc?
Yes, you claim deduction on all types of income except donations subject to qualifying limit.
Q- Can NRI claim a tax deduction under 80G for the donation made to Indian NGOs?
Yes, NRI can claim tax deduction for donations made to Indian NGO u/s 80G. Though the amount deposited should be in INR but some trusts also accept the international currency. The policies differ from organization to organization.
Q- I submitted ITR and got a refund for this year. But I forgot to include the amount of 80G in ITR. In that case, is it possible to file a revised ITR and claim it now?
Yes, For Financial Year 2022-23 (Assessment Year 2023-24), you can claim deduction u/s 80G by filing a revised return on or before 31/12/2023.
Q- How the different donations can be categorized under Section 80G?
The donations under section 80G can easily be categorized into these four categories:
The available Deductions = 100% of the amount donated
The available Deductions = 50% of the amount donated
The available Deductions = 100% of the amount donated but the maximum upto the prescribed ceiling
The available Deductions = 50% of the amount donated but, maximum upto the prescribed ceiling
Q- How to check if the trust/organization to whom I would be donating gives 80G deductions?
Government-approved (registered) trusts/organizations are eligible for 80G deductions. You can easily check the registration of a trust/ organization through the Income Tax Website. Simply visit www.incometaxindia.gov.in & check for the trust/organization.
Q- How will the donations made in kind or for consideration other than money be dealt with under section 80G?
Under Section 80G of the Income Tax Act 1961 no tax benefit for donations made in kind like for clothes, articles, books, food, goods, etc.
Q- What shall be the payment mode for availing the benefit under Section 80G regarding the amount donated?
In case you wish to claim an income tax deduction benefit in respect of the amount you have donated to eligible institutions, you need to adhere to the following:
No deduction or income tax benefit shall be given for donations made in kind such as donation of clothes, food, etc. No tax benefit for cash donations exceeding Rs 2000 shall be allowed to the taxpayer. The payment for a higher amount (exceeding Rs 2000) should be made through cheque, net banking, demand draft, or other banking channels.
Q- Can someone other than an individual claim benefits under Section 80G?
Yes, the income tax deduction under section 80G can also be claimed by a person other than individuals. It is also allowed for
- HUF (Hindu Undivided Family)
- Partnership Firms etc.
One of the most alluring points making this deduction an attractive tax-saving option is its availability to both Residents and Non-Residents.
Q- Is donation made to trusts like Akshay Patra, and SaveTheChildren, etc, eligible for Sec 80G tax benefit?
There are some well-known trusts across India where donations made are eligible for deduction u/s 80G. We’ve enlisted a few names for you as an example.
|Trust||Sec 80G Benefit|
|Akshay Patra||50% tax exemption|
|Cry.org||50% tax exemption|
|Save The Children||50% tax exemption|
|Give India||50% tax exemption|
Q- How can I save tax by donating to NGO?
In case the NGO to which you have donated is eligible, then you can claim a tax benefit of 50% or 100% of the amount donated with or without a qualifying limit. But if the donation falls under the category subject to the qualifying limit, then the total deduction of such donations shall not cross 10% of adjusted gross total income.
We hope our blog was able to solve any issues faced by you related to donations. Still, if you need any assistance, our eCAs are here to help you 24×7.
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