Budget 2023 Update for Deductions Under Section 80G
As per the 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
In the latest update, individuals who want to claim the deduction under section 80G and take advantage of deductions for donations to charitable institutions are required to submit a TDS-like certificate that has to be downloaded from the Income Tax Department’s e-filing portal by the donee institution or the NGO to which the donation under 80G has been made.
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.
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?
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.
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.
List of donations eligible -
- National Defence 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 medical relief to the poor
- National Illness Assistance Fund
- National Blood Transfusion Council or any State Blood Transfusion Council
- National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities
- National Sports Fund
- National Cultural Fund
- Fund for Technology Development and Application
- National Children’s Fund
- Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
- 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
- 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
- Prime Minister’s Armenia Earthquake Relief Fund
- Africa (Public Contributions – India) Fund
- Swachh Bharat Kosh
- Clean Ganga Fund
- National Fund for Control of Drug Abuse
Table B - It is for donations eligible for a 50% deduction without any qualifying limit.
Donations eligible for deduction -
- Prime Minister's Drought Relief Fund
Table C - It is for donations eligible for a 100% deduction with a qualifying limit.
Donations eligible for deduction -
- Donors can contribute to government, local authorities, institutions, or associations for family planning initiatives.
- Companies have the option to donate to the Indian Olympic Association or similar recognized organizations in India.
- The purpose of these donations is to support the development of sports infrastructure or sponsor sporting events in India.
Table D - It is for donations eligible for a 50% deduction with a qualifying limit.
- Any additional fund or institution meeting the criteria outlined in Section 80G(5) qualifies.
- Donations to the government or local authorities can be used for charitable purposes, excluding family planning promotion.
- Contributions can be made to Indian authorities dedicated to housing, urban development, or village enhancement.
- Support can be extended to corporations specified in Section 10(26BB) aimed at advancing the interests of minority communities.
- Funding is eligible for the repair or renovation of officially recognized religious sites like temples, mosques, gurudwaras, churches, and others.
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 a Section 80G deduction, our CAs can help you save taxes so you can keep more of what you earn. Tax2win tax experts are experienced professionals who can help individuals and businesses with various aspects of tax filing. Book Consultation Today!
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 is 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 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 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.
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.
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.
Criteria for Deductions:
Eligible Donations: Various donations specified in Section 80G are eligible for deductions.
Deduction Percentage: The deductions can be up to 100% or 50% with or without restrictions, as specified in Section 80G.
The following taxpayers can claim a deduction under section 80C -
- Individuals
- Firms
- Companies
- Hindu Undivided Family (HUFs)
- Non-resident Indians (NRIs)
- Any other person
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.
| Investment in NSCs & Tax saving FDRs |
Rs.150,000 |
| Contribution to the 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 Institutions |
Rs.60,000 |
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:
| Income from salary - |
10,00,000 |
| Income from short-term 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 two categories below:-
Without Qualifying Limit
| Donation Made to |
Amt. |
- National Defence Fund (100%)
- Clean Ganga Fund (100%)
- National Illness Assistance Fund (100%)
- National Cultural Fund (100%)
|
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 |
Section 80G Deduction: 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.
- Jawaharlal Nehru Memorial Fund*
- Indira Gandhi Memorial Trust*
-
Rajiv Gandhi Foundation*
*Note: From FY 2023-24 onwards, donations to these funds are not eligible for deduction.
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.).
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).
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