Deductions under Section 80G of Income Tax Act Explained

Forwarding a helping hand to the needy in the form of funds is a noble action. To support this charitable cause, the government has allowed tax exemptions on donations made to any charitable organisation under Section 80G.

This scheme also allows a 100% deduction on some donations with limits.

Keep reading to know more about this scheme and its filing steps.

What Is Section 80G of the Income Tax Act?

Section 80G defines a tax exemption applicable to relief funds or funds spent on charitable causes. Taxpayers can claim the applicable deductions under Section 80G of the Income Tax Act.

However, individuals should know that this exemption comes with specific clauses. Not every donation falls under the applicable deductions.

This section allows deductions under prescribed funds that an organisation, individual, enterprise, etc., can claim. They have to make the donations via a draft, cheque or cash.

This would substantiate an individual's claim against a charitable action. However, this donation should be more than ₹10,000.

The government doesn't allow tax deductions on donations made in the form of a kind such as material, food, clothes, books, medicine, etc., under Section 80G of the Income Tax Act.

Any donations made in cash above ₹2,000 aren't applicable under section 80G deductions from the FY 2017-18. Hence, entities should make such contributions in the form of a cheque or draft to qualify for exemptions.

Individuals should know that donations specified under Section 80G are eligible for either a 100% or a 50% deduction. These deductions may or may not have restrictions depending on the terms.

Let's check what the eligibility criteria to claim 80G of the Income Tax Act are.

Who Is Eligible to Claim Deduction Under Section 80G?

Individuals should know that different causes are specified under the exemption percentages. A taxpayer can check whether their charitable act falls under the 80G exemption list before filing returns.

Technically, every individual, Hindu Undivided Families and enterprises are eligible to claim donations under Section 80G. However, it follows some rules laid down by the government.

NRI's can also claim the 80G tax benefit provided they have contributed to registered or trusted institutions.

Let's check what factors qualify under different percentages of tax deductions.

Types of Donations Applicable for Deductions Under Section 80G

The following tables list out the types of donations eligible for the maximum limit of deductions under 80G and the percentages.

Donations Applicable for 100% Deduction (Without Qualifying Limit)

National Fund for Control of Drug Abuse
Central Government Set National Defence Fund
National or State Blood Transfusion Council
Chief Minister's Relief Fund
Public Contributions Fund (Africa)
National Foundation for Communal Harmony
Clean Ganga Fund
Fund for Technology Development and Application
National Illness Assistance Fund
National Trust for Wellbeing of Individuals With Multiple Disabilities, Cerebral Palsy, Autism, and Mental Retardation.
Maharashtra Chief Minister's Earthquake Relief Fund
Swachh Bharat Kosh
Maharashtra Chief Minister's relief fund (1st October 1993 to 6th October 1993)
Fund Set Up by the Gujarat State Government to Help Earthquake Victims in the State
Fund Set up by the Gujarat State Government to Help Earthquake Victims in the State
National Cultural Fund
Prime Minister's Armenia Earthquake Relief Fund
Zila Saksharta Samiti
National Children's Fund
Prime Minister's National Relief Fund
State Government Fund Towards Medical Relief to Poor
The Army Central Welfare Fund
Institution, Trust Against Section 80G(5C) to Aid Gujarat Earthquake Victims

Donations Entitled for 50% Deduction (Without Qualifying Limit)

Rajiv Gandhi Foundation
Drought Relief Fund (Prime Minister)
Jawaharlal Nehru Memorial Fund
Indira Gandhi Memorial Trust

Apart from no restriction on qualifying limits, there is a 10% adjustment of gross total income.

Donations Eligible for 100% Deduction (With 10% Alteration on Gross Total Income)

Donations to promote family planning made to the government or any authorised institution, associations, etc.
Contribution by a company to the Indian Olympic Association or other prestigious sports and games institute in India. Sponsoring Indian games is also considered a donation.

Individuals should know that adjusted gross income in a taxable income is calculated after considering deductions other than those under Section 80G. Such deductions also reduce certain incomes, such as long-term capital gains.

Donations Applicable for 50% Deduction (10% Adjusted Gross Total Income)

Donations made to the government or a local authority for any charitable purpose

However, the mentioned donations should be made in the form of a cheque, demand draft, etc. Payment made in the form of cash is exempt from benefits.

Let's check the documents required to claim the mentioned section.

What Are the Documents Required to Claim Tax Exemptions Under Section 80G?

Eligible taxpayers have to submit the mentioned documents to file a tax return without hassle.

Stamped Receipt: To claim deduction under Section 80G, individuals have to submit a receipt issued by an authorised trust. This receipt must detail the donor's name, donation amount, address, name of the trust, etc.
Form 58: Donations applicable under 100% deduction need to submit Form 58. This contains details of the amount authorised against a project, expenses, amount collected, etc.
Registration Number of a Trust: They have to mention the registration number of a trust issued by the Income Tax Department under Section 80G.
Validity of Registration: A donor needs to assess whether the registration date is valid and similar to the day of donation.
Photocopy of the 80G Certificate: They have to submit a photocopy of the 80G certificate with receipts.

The data mentioned above explains Section 80G and several factors involving it. Individuals should check the official website for more information on its terms and conditions.

Frequently Asked Questions

✓ Can Individuals claim deductions under section 80G against a donation towards political parties and foreign institutions?

No, a donation made to foreign institutions and political parties is not applicable for deductions.

✓ Which 80G deduction limit does the Prime Minister's drought relief fund fall under?

The Prime Minister's drought relief fund falls under the 50% deduction limit. Here, individuals need to check specific terms.