Updated on: 28 Oct, 2021 12:32 PM
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Contents

deduction under section 80G

What is section 80G of the income tax act?

Section 80G of the income tax provides an income tax deduction to the tax-payers on donations made to charitable institutions and specified trusts / certain funds, etc. This deduction is available to all types of persons.

Who can claim a deduction under Section 80G?

Any person can claim deduction u/s 80G. It doesn’t matter if the assessee claiming the deduction is an individual, HUF, Company etc.
Even non-residents are eligible for this deduction.The only condition is that the donation must be made in specified funds & institutions only.

What type of donations are eligible for the deduction under section 80G?

Only specified donations mentioned in the income tax act are eligible for deduction u/s 80G.. Donations in kind shall not be allowed . Donation in cash is allowed upto Rs. 2000/- only.

How much deduction is allowed under section 80G?

While your generosity may know no limits, tax benefits on donations do. Some donations are allowed 100% deduction while some have limits. Read below to know how much deduction amount your donation is eligible for.

What are the changes pronounced under Budget 2020?

From FY 2020-21 following changes to section 80G shall apply:

  • Presently complete details of donee (the person to whom the donation is made) are required to be entered manually by the taxpayer (donor) . To make the process hassle-free, it proposed that donee’s information will be prefilled in the ITR .
  • The donee shall furnish the statement of all the donations received on the basis deduction under section 80G will be allowed to the doner.In case the donee fails to furnish such statement then penalty and fee shall be levied.
  • As per the new tax rates introduced for FY 2020-21 (AY 2021-22) in the Budget 2020, the benefit of reduced tax rates can be claimed if the taxpayer opts to forego benefits available under various income tax deductions and exemptions except for section 80CCD(2) and 80JJAA.
  • If you want to claim tax benefit u/s 80C,80D, 80G, HRA etc then you should opt for old tax rates.

How to calculate the amount of deduction under section 80G of the income tax?

Section 80G broadly categorize 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.

deduction under section 80G

*Maximum limit known as 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 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 first 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 qualifying limit.

What is “Adjusted Gross Total Income” for calculation of tax exemption 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 tax is not payable
  • Long-term capital gains under Section 112, 112A which have been included in GTI
  • Short term capital gains under Section 111A
  • Income referred to in Sections 115A, 115AB, 115AC, or 115AD.

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 deduction is available without any qualifying limit. This is further sub-categorised 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-categorised in 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

Jawaharlal Nehru Memorial Fund

50%

Prime Minister’s Drought Relief Fund

50%

Indira Gandhi Memorial Trust

50%

Rajiv Gandhi Foundation

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 institutions which satisfies the conditions mentioned in section 80G(5)

50%

Govt. or any local authority,institution or association to be utilised 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%
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Example to explain the calculation of amount of deduction under section 80G

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

Investment in NSCs

Rs.20,000

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

Rajiv Gandhi Foundation

Rs.8,000

Paid to State Government for Family Planning

Rs.60,000

Paid to Approved Charitable Institution

Rs.40,000

Now, let’s see how Mr X will be able to claim deductions of various investments & donations made by him.

deduction under section 80G

deduction under section 80G

deduction under section 80G

deduction under section 80G

What is the mode of payment of donations for 80G?

For amounts up to Rs. Rs.2,000 you can make donations in cash. However for an amount greater than the same, the contribution must be made in the form of cheque , digital payment or demand draft to claim tax benefit. Contributions made in-kind eg: Clothes, Books, Medicines etc are not eligible for deduction claim u/s 80G

I have made some donations to some of the institutions listed above. How can I claim deduction under Section 80G in my income tax return?

For claiming deduction u/s 80G, you have to submit the following details in your Income Tax Return (ITR):

  • Full Name of the Donee Institution
  • Amount of contribution made in the corresponding financial year
  • PAN Number of Donee
  • Address of Donee

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 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 contribution (other than cash) to political parties are eligible for deduction u/s 80GGB & 80GGC. For more detail, refer our guide.
  • All donations do not enjoy deduction u/s 80G. Donations made to only specified funds are eligible, 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 deduction, a donor should not forget to take the donation receipt containing name, PAN, address and registration number of the donee along with the name of donor, amount donated and mode of payment. As the details of 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/-

What Documents are required to Claim tax deduction under Section 80G?

  • Receipt: To claim deduction u/s 80G, you need a receipt of donation 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. If donation falls under 100% deduction category, then Form 58 is a must. The donor should also insist on Form 58 from trust.Form 58 provides details related to the cost of the project, an authorized amount for the project etc. If you do not have Form 58, your deduction claim can be rejected irrespective of the receipt.
  • Registration No. of Trust on Receipt: Every trust registered with 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 as well as the validity period.
  • Photocopy of 80G certificate: While getting a receipt, you should insist for a photocopy of trust’s 80G registration certificate.

Frequently Asked Questions

Q- Can I claim 80G deduction through my employer?

Yes, you can claim deduction u/s 80G through your employer. For that you will need a certificate from employer stating that such donation has been made out of your salary.

Q- Do I need to submit the receipt of my donation in order to claim 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?

There is no specific donation receipt format issued by the Income Tax Department. The only requirement is the mention of Trust name, address, registration number, PAN, donation amount in word and figures, date of donation,name of donor, mode of payment.
Also, the receipt should specify that donation is eligible for deduction u/s 80G.
The donation receipt will be provided by donee (Trust)

Q- What will be the payment proof in case donation is made by the employer through a consolidated cheque?

In this scenario deduction will be allowed on the basis of 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 those incomes which are taxable at special rates. For e.g. short term capital gains, long term capital gain etc.

Q- Can NRI claim 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 have submitted ITR and also 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 2019-20 (Assessment Year 2020-21), you can claim deduction u/s 80G by filing a revised return before 31/3/2021. For Financial Year 2018-19 (Assessment Year 2019-20), you can claim deduction u/s 80G by filing a revised return before 31/3/2020.

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 Deductions which are available = 100% of the amount donated
  • The Deductions which are available = 50% of the amount donated
  • The Deductions which are available = 100% of the amount donated but, maximum upto the prescribed ceiling
  • The Deductions which are available = 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) trust/ organisations are eligible for 80G deductions. You can easily check the registration of trust/ organization through the Income Tax Website. Simply visit www.incometaxindia.gov.in & check for the trust/organization.

Q- How the donations made in kind or for consideration other than money shall 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 in respect of the amount donated?

In case you wish to claim 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 higher amount (exceeding Rs 2000) should be made through cheque, net banking, demand draft or other banking channels.

Q- Can a person other than individual claim benefit 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 to

  • HUF (Hindu Undivided Family)
  • Companies
  • 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, SaveTheChildren.In 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- What is the cash donation limit for FY 2019-20?

There is no restriction on making cash donations. But the deduction under section 80G shall not be allowed for cash donations exceeding Rs 2,000.

Q- How can I save tax by donating to NGO?

In case the NGO to which you have made the donation is eligible then, you can claim tax benefit of 50% or 100% of the amount donated with or without qualifying limit. But if the donation falls under the category which is subject to 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 File My Tax online, you can also file your ITR for FREE! Visit our website to know more.
Keep following File My Tax online for more tips to make your tax life easier.

Q- Is donation made after 1st April 2020 eligible for A.Y. 2020-21?

Yes, as per reliefs announced by Finance Minister in her speech on 24th March 2020. As per the discretion of the taxpayer donations or tax investment made till 30th June 2020 can either be claimed for AY 2020-21 or AY 2021-22. Hence donations made till 30th June 2020 are eligible to be claimed for AY 2020-21 in this case.