2500 Cr. Saved Already!
Trusted by 1 Million+
10+ Yr. of Industry Experience
Section 80G is a provision under the Income Tax Act of India that allows taxpayers to claim deductions for donations made to specified charitable institutions and funds. The purpose of this section is to encourage individuals and organizations to contribute towards charitable causes while also providing them with tax benefits.
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. Taxpayers need to provide the details of their donations and the eligible amount for deduction under Section 80G while filing their income tax returns.
As per the latest announcement in budget 2023, the donations made to the following funds will not be eligible for deductions under Section 80G:-
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.
Both company or non-company can claim a deduction under Section 80G of the Income Tax Act for donations made to eligible charitable institutions or funds.
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.
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.
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,D are included under 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 si important to separately mention the total amount of deduction claimed under SEction 80G, if the taxpayer is filling the ITR form 2 and 3.
Claiming deductions under Section 80G of the Income Tax Act can involve certain complexities, but with proper understanding and documentation, it can be done successfully. If you are facing issues while claiming Section 80G deduction, Tax2Win is here for your help. Tax2win tax experts are experienced professionals who can help individuals and businesses with various aspects of tax filing.
Claim your Section 80G deduction and file ITR today.
Adjusted Gross Total Income in this regard means the sum total of your income under all heads less the following amounts:
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.
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:
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 |
| Adjusted GTI | 8,50,000 |
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. |
|
8,000 3,000 7,000 15,000 |
| 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 | |
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
Category 2: Donations where deduction available is subject to qualifying limit. This is further sub-categorized into funds with
| 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 |
| FUND NAME | DEDUCTION ALLOWED |
|---|---|
| Prime Minister’s Drought Relief Fund | 50% |
| 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% |
| 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% |
Some points to be kept in mind while claiming deduction u/s 80G are as follows:
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.
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.
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)
In this scenario, the deduction will be allowed based on a certificate issued by employers or DDO (Drawing and Disbursing Officer).
Yes, you claim deduction on all types of income except donations subject to qualifying limit.
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.
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.
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
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.
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.
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.
Yes, the income tax deduction under section 80G can also be claimed by a person other than individuals. It is also allowed for
One of the most alluring points making this deduction an attractive tax-saving option is its availability to both Residents and Non-Residents.
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 |
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.
Using Tax2Win, you can also file your ITR for FREE! Visit our website to know more.
Keep following Tax2win for more tips to make your tax life easier.
