Section 80G of the Income Tax Act: A Complete Guide to Tax Benefits on Donations

When it comes to saving taxes in India, Section 80G of the Income Tax Act plays a crucial role by encouraging individuals to donate to charitable organizations. It not only supports social causes but also enables taxpayers to reduce their tax burden. If you make donations or plan to do so, understanding this section can help you claim valuable tax benefits.

Introduction: What is the Income Tax Act’s Section 80G?

Sec 80G of the Income Tax Act provides tax deductions for donations made to specific funds, charitable institutions, or organizations in India. Both individuals and companies can claim these deductions while filing their income tax returns (ITR).

The main purpose of this section is to promote philanthropy and channel resources toward approved organizations working for social, educational, cultural, or developmental causes.

List of Donations Eligible for Deduction Under Section 80G of the Income Tax Act

Donations under Sec 80G of the Income Tax Act are classified into different categories based on the percentage of deduction allowed and whether a qualifying limit applies.

1. Donations Eligible for 100% Deduction Without Limit

The Income Tax Act encourages charitable giving by offering attractive tax benefits under Section 80G. Among the various types of donations, some play critical roles as they directly aid the nation’s welfare, provide emergency assistance, improve healthcare, help preserve culture, and promote social development.

Donations to these specific organizations and funds qualify for a 100% deduction, with no limit on the amount. This means that you can claim the entire donated amount, no matter how large, as a deduction on your income tax return. Such contributions are crucial for addressing urgent needs, such as supporting the defense forces, helping natural disaster victims, improving children’s welfare, preserving cultural heritage, ensuring healthcare access, and assisting individuals with disabilities.

National Defence Fund
Prime Minister’s National Relief Fund
National Foundation for Communal Harmony
National/State Blood Transfusion Council
National Children’s Fund
National Cultural Fund
National Illness Assistance Fund
The National Trust for the Welfare of People with Multiple Disabilities, Autism, Cerebral Palsy, and Intellectual Disability
Fund for Technology Development and Application
Zila Saksharta Samiti (District Literacy Committees)
Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund (any State/UT)
Any State Government Fund for medical relief to the poor
Chief Minister’s Earthquake Relief Fund, Maharashtra
Andhra Pradesh Chief Minister’s Cyclone Relief Fund (1996)
Gujarat State Government 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 (starting FY 2015–16)

2. Donations Eligible for 50% Deduction Without Limit

Under Section 80G of the Income Tax Act, not all donations qualify for a full deduction. Some contributions are eligible for only a 50% deduction, but the important point is that there is no maximum cap on the donation amount. This means that whatever amount you donate to these specified institutions, half of it can be claimed as a deduction while filing your income tax return.

By contributing under this category, you not only reduce your taxable income but also play a role in strengthening social development initiatives supported by the government and approved institutions.

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

3. Donations Eligible for 100% Deduction Subject to 10% of Adjusted Gross Total Income (AGTI)

Donations made to the Government or an approved local authority for promoting family planning
Donations by companies to the Indian Olympic Association or other notified associations for the development of infrastructure for sports and games in India

4. Donations Eligible for 50% Deduction Subject to 10% of Adjusted Gross Total Income (AGTI)

Donations made to any other charitable institution or fund registered under Section 80G (not covered above)
Donations to authorities engaged in urban or rural planning and development
Donations for the upkeep or restoration of notified temples, mosques, gurdwaras, churches, or other places of worship
Donations to institutions working for the promotion of minority community interests

Recent Amendment Update (Effective from 1 March 2023)

As per the Finance Act 2023, the following changes apply to Section 80G of the Income Tax Act:

Certain central government funds have been removed from the eligible donation list.
Donations made to these funds will not qualify for any deduction under Section 80G if contributed after 1 March 2023.
The funds that are no longer eligible are:
Prime Minister’s National Relief Fund
National Defence Fund
National Foundation for Communal Harmony
National/State Blood Transfusion Council
Donations made to these funds before 1 March 2023 are still valid for deduction.
Taxpayers should carefully check the latest eligible fund list before making donations to claim deductions.

How to Calculate Deduction Under Section 80G of the Income Tax Act

The deduction amount depends on the type of donation and the category of the organization:

Step 1: Identify the organization and check if it qualifies for 100% or 50% deduction.

Step 2: Check whether the donation is subject to the 10% Adjusted Gross Total Income (AGTI) limit.

Step 3: Calculate the maximum allowable deduction as per the category.

Example:

Gross Total Income (GTI): ₹8,00,000

Deductions under other sections: ₹50,000

Adjusted Gross Total Income (AGTI) = ₹7,50,000

Now, if you donated ₹50,000 to an NGO eligible for a 50% deduction with the 10% AGTI limit:

Maximum limit = 10% of AGTI = ₹75,000

Eligible donation = ₹50,000 (within the limit)

Deduction allowed = 50% of ₹50,000 = ₹25,000

Who Can Claim Deduction Under Section 80G of the Income Tax Act?

The deduction under this section is available to:

Individuals (salaried or self-employed)
Hindu Undivided Families (HUFs)
Companies
Partnership firms
Trusts and other taxpayers
Both resident and non-resident taxpayers can claim, provided the donation is made to approved Indian institutions.

Details and Documents Needed to Claim Deductions Under Section 80G of the Income Tax Act

If you are making donations and want to claim tax benefits under Sec 80G of the Income Tax Act, you need to keep proper details and supporting documents. The Income Tax Department only allows claims when you have valid proof. Let’s break it down:

1. Essential Details Required

When you donate to an institution approved under Sec 80G, ensure the following details are mentioned in the donation receipt:

Name of the Donor (your name as per PAN)
Amount Donated (in figures and words)
Mode of Payment (cash, cheque, DD, or online transfer)
Name and Address of the Donee (Charitable Organization/Trust)
PAN of the Trust/Institution (mandatory)
Registration Number of the Trust under Section 80G
Validity of 80G Registration (as approval is valid for a certain period)
Date of Donation

General trivia: Always cross-check that the trust’s 80G registration is still valid.

2. Documents You Must Collect

To claim the deduction, you should have the following documents:

(a) Donation Receipt

Issued by the charitable institution.
PAN, registration number under Section 80G, donor and donee details, and donation amount are required.

(b) Form 58 (if applicable)

If you donated to a fund or institution that qualifies for a 100% deduction without limit, then Form 58 issued by the trust is required.
Without Form 58, your claim may be restricted to 10% of Adjusted Gross Total Income (AGTI).

(c) Proof of Payment

Bank statement, cheque counterfoil, or UPI/online transfer proof.
For donations over ₹2,000, non-cash methods (digital or check/DD) must be used.

(d) 80G Certificate (if available)

Some organizations provide an additional 80G certificate mentioning their registration details.
This is not mandatory, but it strengthens your claim during scrutiny.

3. Who Can Claim Deduction?

Individuals, HUFs, Companies, Firms, Trusts – all are eligible.
The donor must file an Income Tax Return (ITR) and claim the deduction under Chapter VI-A.

4. How to Claim in ITR?

When filing ITR:

Go to the “Deductions under Chapter VI-A” section.
Select Section 80G.
Enter details such as:
- Name of the Donee
- PAN of the Donee
- Donation Amount
- Eligible Percentage (50% or 100%)
- Amount Qualifying for Deduction
Upload receipts/Form 58 if required during assessment.

When you fill in the donee name, PAN, and donation amount, accuracy is crucial. If you miss any of these details, you risk disallowed deductions. For comprehensive support in filing, consider exploring CAAFT Income Tax Filing Services in Chennai, where experts handle all such deductions with care.

Important Points to Remember About Section 80G

Cash contributions above ₹2,000 are not deductible. Always donate via cheque, demand draft, or online transfer for amounts above this limit.
Donations ought to go to organizations that are registered under Section 80G.. Always verify before donating.
Deduction can be claimed only in the financial year in which the donation is made.
The donation should not be for personal benefits like school fees, religious ceremonies, or charity outside India.
Donations in kind (clothes, food, medicines, etc.) are not allowed for deduction.

Final Thoughts

Sec 80G of the Income Tax Act is a win-win provision – it encourages individuals and businesses to contribute towards nation-building while also providing them with tax benefits. By donating to approved institutions, you can not only make a difference in society but also optimize your tax liability.

So, the next time you plan to donate, make sure the organization is registered under Sec 80G, keep your receipts safe, and claim your rightful tax deduction.