Section 80G Deduction: Donations Eligible Under Section 80G

Section 80G of the Income Tax Act, 1961, is a pivotal provision designed to foster philanthropy by offering tax deductions for donations made to approved charitable institutions. This section is particularly relevant for Indian taxpayers seeking to align their charitable contributions with financial planning, especially under the old tax regime, as the new regime introduced in recent years does not permit these deductions. Given the current date, March 18, 2025, the information reflects the latest available data, ensuring relevance for the financial year 2024-25 and assessment year 2025-26.

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The provision is not just a tax-saving tool but also a societal incentive, encouraging donations to causes that benefit public welfare, such as education, healthcare, and disaster relief. However, navigating its complexities requires understanding eligibility, donation types, deduction rates, and recent regulatory changes, which this note explores in detail.

Eligibility Criteria for 80G Donation.

Research suggests that a broad spectrum of taxpayers can claim deductions under Section 80G, including individuals, companies, firms, Hindu Undivided Families (HUFs), and Non-Resident Indians (NRIs). This inclusivity aims to encourage diverse participation in charitable activities. However, the evidence leans toward certain restrictions, particularly for taxpayers with income or loss from business or profession, especially for donations under related provisions like Section 80GGA, which covers scientific research and rural development. These restrictions imply that such taxpayers may not claim deductions for specific categories, adding a layer of complexity to eligibility.

To claim, taxpayers must opt for the old tax regime, as the new regime, default since AY 2024-25 as per recent amendments, does not allow Chapter VI-A deductions, including Section 80G. This shift underscores the importance of annual tax regime choices, particularly for those with charitable inclinations.

Who Can Benefit from Section 80G Deductions?

The beauty of Section 80G lies in its inclusivity. It covers a broad spectrum of taxpayers:

• Individuals (including salaried persons)
• Companies
• Hindu Undivided Families (HUFs)
• Firms
• Non-Resident Indians (NRIs)
• Other entities recognized under Indian tax laws

However, it’s crucial to note that this deduction is available only under the old tax regime. Those opting for the new regime cannot avail of these benefits.

Types of Donations Eligible and Documentation.

Donations eligible under Section 80G must be monetary, with strict guidelines on payment modes. Cash donations exceeding Rs. 2,000 are not deductible, pushing taxpayers toward cheque, demand draft, or electronic transfers for larger contributions. This rule, effective for several years, aims to promote transparency and reduce untraceable transactions.

Institutions must be approved under Section 80G, and donors need a receipt detailing the institution’s name, address, PAN, registration number, donation amount, mode, and donor details. This documentation is crucial for claiming deductions and ensures compliance with tax authorities. The registration validity, often limited to a period, must be verified, as per updates from Finance Act 2020, which reformed the registration process for NGOs.

Deduction Rates and Limits: A Detailed Breakdown.

The deduction rates under Section 80G vary, offering 50% or 100% of the donated amount, with some categories subject to a 10% limit of adjusted gross total income (GTI). Adjusted GTI is calculated as GTI minus deductions under sections 80C to 80U (excluding 80G), non-taxable income, long-term capital gains, short-term capital gains under Section 111A, and income under Sections 115A, 115AB, 115AC, 115AD. For instance, if GTI is Rs. 11,00,000 with Rs. 2,50,000 under 80C, adjusted GTI would be Rs. 8,50,000, limiting certain deductions to Rs. 85,000.

Institutions are categorized as follows, with examples:

This categorization, drawn from official guidelines, helps taxpayers plan donations strategically to maximize deductions while supporting preferred causes.

Claiming the Deduction: Process and Requirements.

Claiming Section 80G deductions involves filing details in Schedule 80G of the income tax return (ITR forms 2 and 3), with tables A, B, C, and D for categorization. A new column in Table D for AY 2023-24 onwards requires an ARN (donation reference number) for 50% deductions with qualifying limits, enhancing transparency. The process, while straightforward, demands accurate categorization to avoid discrepancies during assessments.

Documents required include the donation receipt and a photocopy of the 80G certificate, ensuring all details align with tax filings. For donations to the Ayodhya Ram Mandir Trust, for example, 50% deduction is available, subject to 10% GTI limit, with cash donations over Rs. 2,000 ineligible, as per specific guidelines.

How to Claim the Deduction Under Section 80G While Filing ITR?

Claiming deductions under Section 80G involves a straightforward process, but it requires careful documentation and adherence to specific guidelines. Here’s a step-by-step guide on how to claim these deductions while filing your Income Tax Return (ITR).

Understanding the Basics.

The net taxable income is calculated after subtracting all eligible deductions from the gross total income. Section 80G deductions are subtracted from this gross total income, reducing the overall tax liability. The deduction percentage ranges from 50% to 100% of the donated amount, depending on the institution.

Filling Out Schedule 80G.

To claim deductions under Section 80G, you must fill out Schedule 80G in your ITR form. This schedule includes Tables A, B, C, and D, each corresponding to different categories of charitable institutions.

1. Table A: Donations eligible for a 100% deduction without any qualifying limit.
   • Examples include:
     • National Defence Fund.
     • Prime Minister’s National Relief Fund.
     • National Foundation for Communal Harmony.
     • An approved university/educational institution of National eminence.
     • Zila Saksharta Samiti.
     • Fund set up by a state government for medical relief to the poor.
     • National Illness Assistance Fund.
     • National 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.
     • 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.
2. Table B: Donations eligible for a 50% deduction without any qualifying limit.
   • Examples include:
     • Prime Minister’s Drought Relief Fund
3. Table C: Donations eligible for a 100% deduction with a qualifying limit.
   • Examples include:
     • Donations to government, local authorities, institutions, or associations for family planning initiatives.
     • Companies can donate to the Indian Olympic Association or similar recognized organizations in India to support sports infrastructure or events.
4. Table D: Donations eligible for a 50% deduction with a qualifying limit.
   • Examples include:
     • Donations to government or local authorities for charitable purposes excluding family planning.
     • Contributions to Indian authorities for housing, urban development, or village enhancement.
     • Support to corporations specified in Section 10(26BB) aimed at advancing the interests of minority communities.
     • Funding for the repair or renovation of officially recognized religious sites.

Required Details for Claiming Deductions.

To claim deductions under Section 80G, you need to provide the following details in your ITR:

• Name of the Donee.
• PAN of the Donee.
• Address of the Donee.
• Amount and Breakup of Contributions (in cash and other modes).
• Amount of Deduction.

Additional Requirements.

A new column has been added under Table D of ITR forms requiring the disclosure of the ARN (donation reference number) for entities where a 50% deduction is allowed, subject to the qualifying limit.

If you are filing ITR forms 2 and 3, ensure you separately mention the total amount of deduction claimed under Section 80G

Example: How Does Section 80G Work in Practice?

Let’s consider an example:

Mr. Rahul has an annual salary income of ₹9 lakhs and short-term capital gains of ₹1 lakh. He invests ₹1.5 lakhs in tax-saving instruments under Section 80C and makes donations as follows:

Calculation:

Adjusted Gross Total Income (GTI):

Net Qualifying Limit = 10% of Adjusted GTI = ₹75,000

Now classify donations:

• Without Qualifying Limit:
  • Prime Minister’s National Relief Fund: ₹10,000 (100%)
  • Clean Ganga Fund: ₹5,000 (100%)
  • Total = ₹15,000
• With Qualifying Limit:
  • Family Planning Promotion Fund: ₹40,000 (100%)
  • Approved Charitable Institution: ₹30,000 (50% of ₹60k)
  • Total = ₹70,000 (Within qualifying limit of ₹75k)

Total deduction under Section 80G = ₹15k + ₹70k = **₹85k**

Another Example:

To illustrate, consider Mr. X with a salary of Rs. 10,00,000 and short-term capital gain of Rs. 1,00,000, claiming Rs. 2,50,000 under Section 80C. His GTI is Rs. 11,00,000, and adjusted GTI is Rs. 8,50,000, with a 10% limit of Rs. 85,000 for applicable categories. Suppose he donates:

• Rs. 33,000 to National Defence Fund (100%, no limit) → deduction Rs. 33,000
• Rs. 50,000 to family planning trust (100%, with limit) → deduction Rs. 50,000
• Rs. 70,000 to rural development trust (50%, with limit) → deduction Rs. 35,000

Total deduction from limit categories: Rs. 50,000 + Rs. 35,000 = Rs. 85,000 (capped at limit). Total deduction: Rs. 33,000 + Rs. 85,000 = Rs. 1,18,000, aligning with examples from tax resources.

This example, based on current calculations, highlights the importance of categorizing donations to optimize deductions within limits.

What Is Adjusted Gross Total Income (AGTI).

Adjusted Gross Total Income (AGTI) is calculated by summing up your income from all sources and then subtracting certain deductions. Specifically, AGTI is determined by deducting the following amounts from your total income:

• Deductions under Sections 80C to 80U: These include various tax-saving investments and expenses, but exclude deductions under Section 80G.
• Income Exempt from Tax: Any income that is not subject to income tax.
• Long-term Capital Gains: Profits from the sale of assets held for more than a specified period.
• Short-term Capital Gains under Section 111A: These are gains from the sale of equity shares or equity-oriented mutual funds held for less than one year.
• Income under Special Provisions: Income covered under Sections 115A, 115AB, 115AC, or 115AD, which relate to specific tax exemptions for foreign income or income from certain investments.

By subtracting these amounts, you arrive at your Adjusted Gross Total Income, which is crucial for calculating further deductions like those under Section 80G.

FAQs: Addressing Common Queries.

To assist taxpayers, here are common questions:

• Can I claim for in-kind donations? No, only monetary donations qualify.
• Can I claim via employer donations? It depends; consult a tax advisor for specifics.
• Is there a donation amount limit? No overall limit, but deductions for certain categories are capped at 10% of adjusted GTI.
• How to verify institution eligibility? Check the Income Tax Department’s list or ensure a valid 80G receipt.
• Can NRIs claim? Yes, for donations to Indian approved institutions.

Conclusion and Recommendations.

Section 80G offers a dual benefit of supporting charitable causes and reducing tax liability, but it requires careful planning, especially with recent changes. Taxpayers should verify institution eligibility, understand deduction limits, and opt for the old regime to claim benefits.

This comprehensive analysis, reflecting the state as of March 18, 2025, ensures taxpayers are well-equipped to navigate Section 80G deductions effectively.

Disclaimer:

This article is intended for informational purposes only and should not be considered as professional tax advice. Readers are advised to consult a tax professional or financial advisor for personalized guidance. The information provided is based on general knowledge and may not reflect the latest changes or updates in tax laws.

Tags: Section 80G Deduction, Tax Deductions, Charitable Donations, Income Tax Act, Tax Savings, Philanthropy in India, CSR, NGO Funding, Tax Benefits for Donations, Indian Tax Laws, Tax Planning Strategies.

C.K. Gupta

Hello, I am C.K. Gupta Founder of Taxgst.in, a seasoned finance professional with a Master of Commerce degree and over 20 years of experience in accounting and finance. My extensive career has been dedicated to mastering the intricacies of financial management, tax consultancy, and strategic planning. Throughout my professional journey, I have honed my skills in financial analysis, tax planning, and compliance, ensuring that all practices adhere to the latest financial regulations. My expertise also extends to auditing, where I focus on maintaining accuracy and integrity in financial reporting. I am passionate about using my knowledge to provide insightful and reliable financial advice, helping businesses optimize their financial strategies and achieve their economic goals. At Taxgst.in, I aim to share valuable insights that assist our readers in navigating the complex world of taxes and finance with ease.