Section 80G of Income Tax Act

Section 80G of the Income Tax Act is a special provision that allows you to claim the donated money (to approved charities or relief funds) as a deduction. This section applies to individuals, companies, HUFs, and firms.

However, to avail of relief u/s 80G, you must make donations only to government-approved organisations. These approved charities have a special Section 80G registration number. This number must be mentioned in the donation receipt.

If the charity’s 80G registration has expired at the time of donation, you cannot claim a deduction. Thus, you must always check whether the donation receipt includes a valid 80G number before claiming it on your tax return.

Let’s study Section 80G of the Income Tax Act in detail, including what it is, how deductions are calculated, and the types of donations that qualify.

Also, we will check out the required documents and the process for claiming the deduction. Lastly, we will look at other related sections of the Income Tax Act and learn about the approved modes of making donations. 

What is Section 80G?

Section 80G of the Income Tax Act is a provision that allows taxpayers to claim deductions on donations made to eligible charitable institutions and funds. The purpose of this section is to incentivise philanthropy and support organisations engaged in social, cultural, or economic development activities.

Deduction under Section 80G Income tax

Under Section 80G, you can claim tax deductions for donations made to approved:

• Charitable institutions
• Relief funds
• Government-authorised bodies

However, not all donations are treated equally. Some get full deduction, some only part; some are unlimited, while others have income-based caps.

Based on this, the donations eligible under Section 80G are grouped into four broad categories. Let’s understand each in detail:

1. Donations with 100% deduction (Available without any qualifying limit)

Under this category, you can claim 100% of the donation as a tax deduction. There is no upper limit, and the full donated amount can be deducted from your taxable income.

This is the most rewarding type of donation in terms of tax savings. However, donations made to specific funds qualify here. Some examples are:

• National Defence Fund
• Prime Minister’s National Relief Fund
• Swachh Bharat Kosh and Clean Ganga Fund
• National Children’s Fund
• National Illness Assistance Fund
• National Cultural Fund
• Army/ Navy/ Air Force Welfare Funds
• Fund for Technology Development and Application
  

These funds are usually set up by the Central Government. Their role in national welfare makes them eligible for full and unrestricted deduction. However, you must ensure the donation receipt contains the 80G registration number to claim this benefit.

2. Donations with 50% deduction (Available without any qualifying limit)

Donations under this category are also not limited by your income level, but only 50% of the amount you donate is deductible. For example:

• Say you donate Rs. 10,000 to any fund in this category. Now, you can claim only Rs. 5,000 as a deduction.

This group usually covers memorial or disaster relief funds. They are created in memory of national leaders or in response to specific causes. Some popular funds covered under this group are:

• Prime Minister’s Drought Relief Fund
• Indira Gandhi Memorial Trust
• Rajiv Gandhi Foundation
• Jawaharlal Nehru Memorial Fund
  

Though tax-saving potential is limited to half the donated amount, this category still allows large contributions without income-based restrictions.

3. Donations with 100% deduction (Available up to 10% of adjusted gross total income)

This category offers a full 100% deduction. However, only up to 10% of your adjusted gross total income can be claimed. For example:

• Say your adjusted income is Rs. 5,00,000. Now, the maximum deduction you can claim is Rs. 50,000, even if you donate more.

The eligible donations covered under this group are:

• Donations to promote family planning (to government or local authorities)
• Indian Olympic Association or Sports Federations
  

These donations help in specific public welfare and development projects. However, to control the tax benefits, a 10% limit is imposed. Please note that if you donate more than the limit, the excess amount cannot be claimed as a deduction.

4. Donations with 50% deduction (Available up to 10% of adjusted gross total income)

This is the most restricted category. Here, you can claim the lower of the following limits:

• 50% of your donation and
• 10% of your adjusted gross total income

For example:

• Say your adjusted gross total income is Rs. 6,00,000 and you donated Rs. 50,000.
• Now, the deduction you can claim is Rs. 25,000 [lower of Rs. 25,000 (Rs. 50,000 x 50%) and Rs. 60,000 (Rs. 6,00,000 x 10%)]

Some eligible donations that fall in this category are:

• Donations to local authorities or the government for general charitable purposes
• Donations to public charitable trusts or approved NGOs
• Religious places (like temples, mosques, or churches), notified by the government as historic or nationally important
• Housing or urban development authorities
• Minority welfare corporations

This category is often used for donations made to local or smaller charitable bodies that usually do not have nationwide reach (but still perform important social functions). To avoid misuse or over-claiming, both the deduction rate and qualifying limit are capped.

How to calculate deduction under 80G

The calculation of deductions under Section 80G depends on the nature of the donation. For donations eligible for a 100% deduction without any qualifying limit, the entire donated amount can be claimed as a deduction. In the case of donations with specific limits, the taxpayer can claim a deduction based on the prescribed percentage of the donated amount.

Donations Eligible Under Section 80G

Individuals, Hindu Undivided Families (HUFs), companies, and taxpayers of all categories are eligible to claim deductions under Section 80G. However, it is crucial to ensure that the charitable institution or fund to which the donation is made qualifies for deductions under this section.

Documents required to claim deduction under Section 80G

To claim a deduction under Section 80G of the Income Tax Act in India, individuals need the following documents:

1. Donation receipts: Official receipt from the charitable institution with donor details, donation amount, and Section 80G registration number.
2. PAN (Permanent Account Number): Donor's PAN details for identity verification.
3. Details of charitable institution: Name, address, and Section 80G registration details of the charitable organisation.
4. Proof of payment: Bank statements or transaction records showing the mode of payment.
5. Form 16A (if applicable): TDS certificate issued by the charitable organisation for tax-deductible donations.
6. Self-declaration form (for cash donations): Required for cash donations, specifying details.
7. Bank account details: Information about the bank account used for the donation.
8. Section 80G deduction details: Accurate information about the donation amount, date, and related details for claiming the deduction in the Income Tax Return.

Keep these documents for proper record-keeping and reference during income tax filings. Always adhere to the latest guidelines from the department of Income Tax for accurate documentation.

How to make the Section 80G deduction claim

Taxpayers can claim deductions under Section 80G while filing their Income Tax Returns. It is essential to accurately fill in the details of the donated amount and the particulars of the charitable organisation in the relevant sections of the tax return form.

Section 80G tax exemption

Section 80G of the Income Tax Act in India provides tax exemptions for donations made to specified charitable institutions and funds. The tax exemption under Section 80G is intended to encourage philanthropy by allowing individuals and entities to deduct the amount of donations made from their taxable income. Here are key points regarding Section 80G tax exemption in India:

1. Deduction on donations: Individuals and entities making eligible donations can claim a deduction from their taxable income under Section 80G. The deduction is allowed based on the amount donated to specified institutions and is subject to certain conditions.
2. 100% exemption or 50% exemption: The extent of the tax exemption depends on the nature of the donation and the recipient organisation. Some donations qualify for a 100% exemption, while others are eligible for a 50% exemption. The specific details are mentioned in the Income Tax Act.
3. Qualifying limits: Donations that qualify for a 100% exemption typically do not have a qualifying limit. However, for those eligible for a 50% exemption, there may be limits specified as a percentage of the donor's gross total income.
4. Eligible organisations: Not all charitable organisations qualify for exemptions under Section 80G. Only institutions and funds registered under this section and approved by the Income Tax Department are eligible to receive donations with associated tax benefits.
5. Verification of eligibility: It is important for donors to verify the eligibility of the organisation or fund before making a donation. The Income Tax Department issues a list of approved institutions eligible for 80G benefits.
6. Donation receipts and documents: To avail of the tax exemption, donors must obtain a receipt from the charitable organisation for the donation made. The receipt should include details such as the name and address of the donor, the amount donated, and the registration number of the recipient organisation under Section 80G.
7. Claiming exemption in Income Tax Return: Taxpayers can claim the exemption while filing their Income Tax Returns. The relevant details, including the amount donated and the details of the recipient organisation, must be accurately filled in the appropriate sections of the tax return form.

Section 80G donation limit

Section 80G of the Income Tax Act in India allows for deductions on donations made to eligible charitable institutions. The donation limit under Section 80G can vary based on the nature of the donation and the specific provisions of the section. Here are some key points regarding the donation limit under Section 80G:

1. 100% deduction without qualifying limit: Certain donations are eligible for a 100% deduction without any qualifying limit. These are typically donations made to specific funds or organisations that have been identified by the government for complete deduction.
2. 50% deduction with qualifying limit: For some donations, the deduction limit is set at 50% of the donated amount. This means that taxpayers can claim a deduction of up to 50% of their gross total income.
3. Specific limits for different donations: The donation limit can vary depending on the specific fund or organisation to which the contribution is made. Some organisations may have a higher limit, while others may fall under the 50% deduction category.
4. Agricultural research and rural development: Donations made for rural development or agricultural research are generally eligible for a 100% deduction without any qualifying limit.
5. Donations to certain religious institutions: Contributions made to certain religious institutions may be subject to specific limits, and the percentage of deduction can vary.

List of donations eligible for 100% deduction without qualifying limit

The list of donations eligible for 100% deduction without a qualifying limit under Section 80G in India includes contributions made to various funds and organisations. Please note that the list may be subject to changes, and it is advisable to check the latest notifications from the Income Tax Department for the most current information. Here are some examples of donations typically eligible for a 100% deduction without a qualifying limit:

1. Prime Minister's National Relief Fund (PMNRF): Donations to the PMNRF qualify for a 100% deduction without any specified limit.
2. National Defense Fund (NDF): Contributions to the National Defense Fund are eligible for a 100% deduction without any prescribed limit.
3. Prime Minister's Armenia Earthquake Relief Fund: Donations to the relief fund for the victims of the Armenia earthquake qualify for a 100% deduction without any specified limit.
4. Africa (Public Contributions – India) Fund: Contributions to the Africa (Public Contributions - India) Fund may be eligible for a 100% deduction without a qualifying limit.
5. National Foundation for Communal Harmony: Donations to the National Foundation for Communal Harmony are typically eligible for a 100% deduction without any specified limit.
6. An approved university or educational institution of national eminence: Donations made to certain educational institutions may be eligible for a 100% deduction without a qualifying limit.
7. Swachh Bharat Kosh (SBK): Contributions to the Swachh Bharat Kosh may be eligible for a 100% deduction without any specified limit.
8. Clean Ganga Fund: Donations to the Clean Ganga Fund may qualify for a 100% deduction without a prescribed limit.

It is essential to verify the latest list of eligible institutions and funds directly from the official website of the Income Tax Department of India or through official notifications.You can also use an income tax calculator to estimate your deductions. Tax regulations can change, and the government periodically updates the list of eligible entities for Section 80G deductions. Always refer to the most recent guidelines for accurate and current information.

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How do deductions under Section 80G benefit different types of taxpayers

Donating to a registered NGO or charitable trust can reduce your taxable income. Under Section 80G, you can claim a tax deduction on the donated amount. However, the actual tax savings depend on:

• Your income level and
• Applicable tax rate

Let us understand this better through an example:

• Mr. A is an individual salaried person
• M/s. Z Pvt. Ltd. is a company

Both Mr. A and M/s. Z donate Rs. 1,00,000 each to an NGO eligible for 50% deduction with a 10% income limit. Their total income for the financial year 2024–25 is Rs. 6,00,000 each. They both opt for the old tax regime to claim the deduction under Section 80G.

Now, firstly, let’s understand how donation reduces the total income for both assesses:

Particulars	Mr. A (Individual)	M/s. Z Pvt. Ltd. (Company)
i) Gross total income	Rs. 6,00,000	Rs. 6,00,000
ii) Donation given to NGO	Rs. 1,00,000	Rs. 1,00,000
iii) Eligible deduction (50% of donation)	Rs. 50,000	Rs. 50,000
iv) Max limit (10% of total income = Rs. 60,000)	Rs. 50,000 (within limit)	Rs. 50,000 (within limit)
v) Taxable income after deduction	Rs. 5,50,000	Rs. 5,50,000

Next, let’s understand the tax savings due to donations:

So, we can clearly observe that:

• Mr. A, as an individual, pays tax based on slab rates (as per the old tax regime). He saves Rs. 10,400 because the Rs. 50,000 deduction reduced his taxable income from Rs. 6,00,000 to Rs. 5,50,000.
• M/s. Z Pvt. Ltd., being a company, is taxed at a flat 30% rate. It saved Rs. 15,000 in tax due to the same Rs. 50,000 deduction.
• Even though both gave the same donation, the tax savings are different because companies and individuals are taxed differently.

This shows that the benefit from Section 80G depends not only on how much you donate, but also on how much tax you were supposed to pay. Companies often save more tax from the same donation because their tax rate is higher (30%), while individuals follow the slab system

Mode of payment for donations under Section 80G

When you donate to a charity or NGO, you can claim a tax deduction under Section 80G. However, to get this benefit, the mode of making the donation matters. Please note that not all forms of payment qualify for the tax deduction.

Below are some important points that can ensure your donation is eligible:

• Cash donation limit:
  • If you donate in cash, the maximum amount eligible for deduction is Rs. 2,000.
  • If you pay more than Rs. 2,000 in cash, the additional amount will not qualify for deduction u/s 80G.
• Preferred modes for higher donations:
  • To claim a deduction for donations above Rs. 2,000, you must use:
    • Cheque
    • Demand draft
    • Digital methods like net banking, UPI, or credit/ debit cards.
      
• Donations in kind are not allowed:
  • If you donate items like food, clothes, or medicines, they will not qualify for tax deduction under Section 80G.
  • Only monetary donations are allowed.

Section 80G validity and renewal

When an NGO or charitable trust wants to offer tax benefits to its donors under Section 80G, it must be registered with the Income Tax Department. This registration is not permanent and must be renewed from time to time.

At first, the organisation gets a provisional registration that is valid for 3 years. Before this period ends, the NGO has to apply for permanent registration, which will then be valid for 5 years. After that, the registration needs to be renewed every 5 years to keep offering tax benefits to donors.

Special case for Section 8 companies

If the organisation is a Section 8 company (which is a type of not-for-profit company under the Companies Act), its Section 80G registration is valid only till March 2025.

Thus, to continue offering tax benefits starting from April 1, 2025, the company must renew its registration.

Conclusion

Section 80G of the Income Tax Act allows donations made to approved NGOs and charitable organisations as deductions (either 50% or 100%, with or without limits). If you are filing your ITR under the old regime, you can reduce the amount of eligible donation from your taxable income. This reduces your income tax liability.  

However, to claim the deduction, donations must be made through the mandated payment modes like cheque, draft, or online transfer. Please note that you can make cash donations only up to Rs. 2,000.

Additionally, maintain the donation receipts and ensure they contain the 80G registration number.