Section 80G: Income Tax Deduction for Donations

Section 80G

Under section 80G of the income tax act, contributions made towards relief funds & charitable institutions can be claimed as a deduction. The amount of donation can be claimed as a tax deduction at the time of filing an income tax return. However, not all donations made are eligible for deduction under section 80G of the income tax act. The following tax payers can claim these deductions –

1. Individual
2. Firm
3. Company
4. Any other person

Eligibility Criteria under Section 80G

Any taxpayer (whether it is an individual, company, HUF) is eligible to claim deduction on his donations to the relief funds or charitable institutions. Even non-residents are also eligible for claiming deduction under section 80G.

Details to be submitted while filing an income tax return under Section 80G

You must submit the following details in your income tax return in order to claim the deduction –

1. Name of the Donee
2. Address of the Donee
3. PAN of the Donee
4. Amount of contribution

Documents need to be submitted to avail deduction under Section 80G

You need to submit the following documents in order to avail deduction under section 80G of the income tax act, 1961 -

• Stamped receipts

  • Stamped receipts from the trust or institution where you donated the amount. It is considered valid proof of donation.
  • The Receipt should include the name, address and PAN of the trust or charitable institution.
  • The receipt should also include the name of the donor and details of the donation amount.
  • It should also include the registration number of a charitable institution or trust and its validity.

• Form-58

  • In case your donation is eligible for a 100% tax deduction, you need to obtain form 58 from a charitable institution or trust.
  • You need to include the project cost, authorized amount and actual amount collected by the charitable institution or trust in form 58.
  • Every individual must submit form 58 to claim a 100% tax deduction. In the absence of form 58, you cannot claim a 100% tax deduction even you have stamped receipt.

• Photocopy of the 80G certificate

  • Photocopy of the 80G certificate is not a mandatory document for claiming a tax deduction.
  • However, you can ask for the photocopy to ensure it is still valid.

• Donation eligible for 100% deduction without qualifying limit

  • Donations made to the prime minister’s national relief fund
  • National Defense fund
  • National Foundation for communal harmony
  • National state blood transfusion council etc.

• Donations eligible for 50% deduction without qualifying limit

  • Indira Gandhi memorial trust
  • Rajiv Gandhi Foundation
  • Jawaharlal Nehru memorial fund
  • Prime minister’s drought relief fund

• Donations with 100% deduction (subject to 10% of adjusted gross total income)

  • Donations to the government or any local authority in order to promote family planning
  • Donations to the Indian Olympic association or any other association or institution for the development of infrastructure for sports & games
  • Donation to Indian Olympic association for the sponsorship of sports & games in India.

• Donations with 50% deduction (subject to 10% of adjusted gross total income)

  • Government or local authority utilized for any charitable purpose other than the purpose of promoting family planning.
  • Establishment of any authority for the purpose of –

    (i) Satisfying the need for house accommodation, or

    (ii) Purpose of planning, development or improvement of villages, towns, cities or all.

  • Any corporation established to promote the interest of the minority community under section 10 (26BB)
  • Any repair or renovation in any notified temple, Gurudwara, Mosque, Church or other places.
  • Any other fund or institution which satisfies the conditions specified under section 80G(5)

Maximum deduction limit under Section 80G

Some donations may qualify for either 50% or 100% tax deduction, whereas some of the donations may qualify for the same deduction. The maximum deduction limit for the tax deduction is 10% of the adjusted gross total income of the taxpayer. They are classified into 2 categories –

• Category 1 – Where a deduction is available without any upper limit

  • Where an institution is eligible for deduction on 100% donation
  • Where an institution is eligible for deduction on 50% donation

• Category 2 –Where a deduction is subject to the maximum limit of 10% of Adjusted gross total income

  • Where an institution is eligible for deduction on 100% donation
  • Where an institution is eligible for deduction on 50% donation

 

Donations Eligible for 100% Deduction without Qualifying Limit

• Setting up of National Defence Fund by the central government.
• Prime Minister’s National Relief Fund
• An approved university/educational institution of National eminence
• National Foundation for Communal Harmony
• Fund created by a state government for the purpose of providing medical assistance to the poor
• A Zila Saksharta Samiti established in the district under the chairmanship of the Collector.
• Fund for National Illness Assistance
• National Blood Transfusion Council or state-level blood transfusion councils
• National Sports Fund
• National Cultural Fund
• National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities
• National Children’s Fund
• Fund for Technology Development and Application
• Army Central Welfare Fund, Indian Naval Benevolent Fund, Air Force Central Welfare Fund, and Andhra Pradesh Chief Minister's Cyclone Relief Fund, 1996
• Chief Minister's Relief Fund or Lieutenant Governor's Relief Fund concerning any State or Union Territory
• Chief Minister’s Earthquake Relief Fund, Maharashtra
• The Maharashtra Chief Minister’s Relief Fund between October 1, 1993, and October 6, 1993
• Any fund set up by the Gujarat State Government solely for the purpose of providing relief to Gujarat earthquake victims.
• Any trust, institution, or fund defined in Section 80G(5C) for the purpose of giving relief to victims of the Gujarat earthquake (contributions made between January 26, 2001, and September 30, 2001), or
• Prime Minister’s Armenia Earthquake Relief Fund
• Swachh Bharat Kosh (applicable from FY 2014-15)
• Clean Ganga Fund (applicable from FY 2014-15)
• National Fund for Control of Drug Abuse (applicable from FY 2015-16)
• Africa (Public Contributions – India) Fund

 

Donations Eligible for 50% Deduction Without Qualifying Limit

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

 

Donations Eligible for 100% Deduction Subject to 10% of Adjusted Gross Total Income

• Government or any other authorised local authority, institution, or association donations for the purpose of promoting family planning.
• Donations by a company to the Indian Olympic Association or to any other notified association or institution set up in India for the purpose of developing infrastructure for sports and games in India or for the purpose of sponsoring sports and games in India.

 

Donations Eligible for 50% Deduction Subject to 10% of Adjusted Gross Total Income

• Any other fund or institution that meets the criteria given in Section 80G(5)
• Government or local government, to be used for any charitable purpose other than promoting family planning
• Any authority started in India for the goal of addressing and supplying the need for housing, or of planning, developing, or improving cities, towns, or villages, or both.
• Any corporation specified in chapter 10(26BB) for the purpose of promoting the minority community's interests
• For repairs or renovations to any temple, mosque, gurudwara, church, or other designated place.

 

Tax Exemption Under Section 80G of the Income Tax Act

Under Section 80G of the Income-tax Act, any contribution to a relief fund or charity institution is tax-deductible. This deduction is taken into account while calculating total taxable income. However, deductions for charitable contributions are subject to the following conditions:

1. Not all donations qualify for a complete tax deduction of 100%. When claiming a deduction, each assessee must refer to the eligibility of the organization. 
2. Individual taxpayers, Indian companies, and partnership firms all are eligible to claim a deduction.
3. A cash donation in excess of Rs 2,000 is not deductible as a charitable contribution.
4. Any donation in kinds, such as clothing, food, or medicine, is not tax-deductible or beneficial.
5. The amount of the gift is determined by the donor's eligibility. The deduction maybe 100% or 50%, with or without restriction, in accordance with section 80G's rules.

Tax Exemption u/s 80GGA of Income Tax Act, 1961

Section 80GGA of the Income Tax Act allows for a deduction against donations made throughout the financial year for computing total taxable income. The following are a few of the conditions for tax deductions on charity donations:

1. The donation must be provided to a charitable organisation or association whose primary objective or mission is scientific research or rural development.
2. The income tax department must approve the association or organisation for this purpose.
3. The specified association or organization must keep approval throughout the donation process to be eligible for the deduction.
4. When an assessee claims a deduction under section 80GGA, that deduction cannot be claimed under any other provision of the Income Tax Act, 1961.
5. Any assessee may claim a deduction, with the exception of those who earn an income (or incur a loss) from a business or profession.
6. A cash donation in excess of Rs 2000 in a financial year is not deductible.
7. Additionally, the entire donation of 100% is tax-deductible.

Donations Qualify for Deduction u/s 80GGA

• Any amount paid to a research organisation or association that does scientific research, or to a college, university, or other educational institution. The donation will be used for scientific study, which will be approved by the prescribed authority according to section 35(1)(ii).
• A research association that does social science or statistical research, or a monetary donation made to a college, university, or other institution. The donation must be used for the same purpose as the previous one, and all of them must be approved by the designated authorities pursuant to section 35(1)(iii)
• Sum paid to an approved association or institution which undertakes any program of rural development and is approved under section 35CCA
• Amount granted to an approved association or institution for the purpose of training individuals to implement rural development projects.
• A public sector company, a local authority, or an approved association or institution that carries out approved projects or schemes under section 35AC.
• Amount paid to the notified Fund for Afforestation.
• Amount paid to notified Rural Development Fund.
• Notified National Poverty Eradication Fund

 

Tax Benefit u/s 80GGB of Income Tax Act, 1961

An assessee of an Indian company may claim a deduction under section 80GGB when computing total taxable income. The deduction may be used to claim the amount against a donation made in the previous year to a political party or electoral trust. However, if the payment is made in cash, the Indian company cannot claim a deduction.

Tax Benefit u/s 80GGC of Income Tax Act, 1961

An assessee may claim a deduction under section 80GGC when computing total taxable income. The deduction may be used for any donations made in the previous year to a political party or electoral trust. If the payment is made in cash, the assessee is not entitled to any deduction. However, the assessee cannot be a local authority or other artificial juridical people that the government entirely or partially funds.