What is Section 80-G
Updated on : Aug. 27, 2022 - 3 p.m. 17 min read.
Section 80G of the Income Tax Act primarily deals with donations made towards charity, with an aim to provide tax incentives to individuals indulging in philanthropic activities. This section offers tax deductions on donations made to certain funds or charities. An amount donated by an individual to an eligible charity can be claimed as a tax deduction while filing an income tax return.
All taxpayers (individuals/companies/Hindu Undivided Families) are eligible to make donations to charity under Section 80G and claim a deduction, subject to limits set down by the government. NRIs are also entitled to the benefits under Section 80G, provided their donations are to eligible trusts or institutions.
Donations paid towards eligible trusts/charities which qualify for tax deductions are subject to certain conditions. Donations under Section 80G can be broadly classified under four categories, as mentioned below.
- Donations with 100% deduction (Without any qualifying limit): Donations made under this category enjoy 100% tax deduction and are not subject to any qualification limit being met. Donations to the National Defense Fund, Prime Minister’s National Relief Fund, The National Foundation for Communal Harmony, National/State Blood Transfusion Council, etc. qualify for such deductions.
- Donations with 50% Deduction (Without any qualifying limit): Donations made towards trusts like Prime Minister’s Drought Relief Fund, National Children’s Fund, Indira Gandhi Memorial Fund, etc. qualify for 50% tax deduction on the donated amount.
- Donations with 100% deduction (Subjected to 10% of adjusted gross total income): Donations made to local authorities or government to promote family planning and donations to the Indian Olympic Association qualify for deductions under this category. In such cases, only 10% of the donor’s Adjusted Gross Total Income is eligible for deductions. Donations that exceed this amount are rounded off to 10%.
- Donations with 50% deduction (Subjected to 10% of adjusted gross total income): Donations made to any local authority or the government that would then use it for any charitable purpose qualifies for deductions under this category. In such cases, only 10% of the donor’s Adjusted Gross Total Income is eligible for deductions. Donations that exceed this amount are capped at 10%.
Documents required to claim the deduction:
Individuals wishing to claim deduction under Section 80G need to have the following documents to support their claim.
- Duly Stamped Receipt: It is mandatory to have a receipt issued by the trust/charity which receives a donation. This receipt should include details like the name, address, and PAN number of the trust, the amount donated, and the name of the donor.
- Form 58: Form 58 is essential if a donor intends to claim 100% deduction on a donation, without which their donation will not be eligible for 100% deduction.
- Registration Number of Trust: Each eligible trust is provided with a registration number by the Income Tax Department and donors should ensure their receipt contains this number. This registration number needs to be valid on the date of a particular donation, failing which a donation might be eligible for deductions.
Donations permitted under Section 80-G:
Individuals who wish to claim deductions under section 80G need to ensure that the organization they are donating to falls under the purview of this Act. Only those donations made to registered and valid funds or charitable institutions qualify for suitable deductions. Trusts and charities need to be registered under Section 12A post which they qualify for the 80G certificate. Individuals are advised to check the credentials of an organization before donating to it.
Mode of Payment to Donations:
An individual can claim deductions against donations made under Section 80G. The payment for the donations can be made in cash or through cheques and drafts. However, one needs to keep a few things in mind in this regard:
- From FY 2017-18, cash donations exceeding the mark of Rs.2,000 will not qualify for the deduction.
- Donations made in kind (food, medicines, clothes, etc.) will not qualify for the deduction.
- To be able to claim deductions under Section 80G, donations of more than Rs.2,000 have to made to be made in any mode other than cash.
- The donations will either be eligible for a deduction of 50% or 100% (with or without restriction), as per the rules prescribed under Section 80G.