Section 80G of Income Tax Act: Tax Benefits on Donations

Section 80G of the Income Tax Act, 1961 offers tax deductions to individuals and entities who donate to specified charitable institutions and relief funds. This provision encourages philanthropy by reducing the donor's taxable income. 

Key points covered in this article:

• Eligibility criteria for claiming deductions under Section 80G

• Recent updates from the Union Budget FY 2025-26

• Categories of eligible donations and their deduction limits

• Calculation methods for deductions

• Payment modes and conditions for eligibility

• Procedure to claim deductions and necessary documentation

• Overview of Section 80GGA for donations towards scientific research and rural development

• Essential considerations for taxpayers

The following taxpayers are eligible for tax deductions under Section 80G:​

• Individuals

• Hindu Undivided Families (HUFs)

• Companies

• Firms

• Non-Resident Indians (NRIs)​

 

The deduction is available only if the donation is made to institutions or funds approved by the Income Tax Department.

Donations eligible under Section 80G are classified based on the percentage of deduction allowed and whether they are subject to a qualifying limit.

1. 100% Deduction Without Any Limit

Donations to the following funds qualify for a 100% deduction without any upper limit:

• Prime Minister's National Relief Fund

• National Defence Fund

• National Foundation for Communal Harmony

• National/State Blood Transfusion Council

 

These contributions are fully deductible from the donor's taxable income.

2. 50% Deduction Without Any Limit

Certain donations qualify for a 50% deduction without any upper limit:

• Jawaharlal Nehru Memorial Fund

• Prime Minister's Drought Relief Fund

• Indira Gandhi Memorial Trust

• Rajiv Gandhi Foundation

 

This allows deduction of 50% of the donated amount from taxable income.

3. 100% Deduction Subject to 10% of AGTI

Donations to certain institutions are eligible for a 100% deduction, subject to a maximum of 10% of the Adjusted Gross Total Income (AGTI) of the donor: 

• Government or approved local authorities for promoting family planning

• Universities or educational institutions approved by the government

 

The deduction is limited to 10% of the donor's AGTI.

4. 50% Deduction Subject to 10% of AGTI

Donations to the following qualify for a 50% deduction, subject to 10% of AGTI:

• Any other fund or institution satisfying the conditions mentioned in Section 80G(5)

• Government or local authority for any charitable purpose other than promoting family planning

 

The deduction is capped at 10% of the donor's AGTI.

To calculate the deduction:

1. Identify the category of the donation (as outlined above).

2. Determine the percentage of deduction applicable (100% or 50%).

3. If the donation is subject to a qualifying limit, ensure that the total deduction does not exceed 10% of AGTI.

How is AGTI Computed

Adjusted Gross Total Income (AGTI) is calculated by:​

• Taking the Gross Total Income

• Subtracting deductions under Sections 80C to 80U (excluding Section 80G)

• Excluding income on which income tax is not payable (e.g., long-term capital gains)​

 

This adjusted income is used to determine the maximum allowable deduction under Section 80G when applicable.

To claim deductions under Section 80G:​ 

• Donations must be made via cheque, demand draft, or digital payment modes

• Cash donations exceeding ₹2,000 are not eligible for deductions under Section 80G

• Donations in kind (e.g., food, clothing) are not eligible

• The recipient institution must have a valid 80G certificate

To claim a deduction under Section 80G:

• Ensure the donation is made to an institution approved under Section 80G

• Obtain a receipt from the institution, which should include: 

  • Name and address of the institution

  • PAN of the institution

  • Registration number under Section 80G

  • Validity period of the registration

  • Name of the donor

  • Amount donated (in figures and words)

• Maintain proof of payment, such as bank statements or transaction records

• While filing your Income Tax Return (ITR), enter the donation details in the appropriate section

• Attach the donation receipt and proof of payment while filing  your ITR

 

For donations that are eligible for 100% deduction without a qualifying limit, Form 58A is required. This form must be issued by the recipient institution and should confirm that the donation is eligible for full deduction.

To support your claim under Section 80G, ensure you have the following documents:

• Donation Receipt: Issued by the charitable institution, containing:

  • Name and address of the institution

  • PAN of the institution

  • Registration number under Section 80G and its validity period

  • Name of the donor

  • Amount donated (in figures and words)​

• Form 58A: Required for donations that are eligible for 100% deduction without a qualifying limit. This form should be provided by the recipient institution

• Proof of Payment: Bank statements, cheque copies, or digital payment confirmations

• PAN of Donor: Your Permanent Account Number (PAN) for identity verification

 

Maintaining these documents is crucial for a hassle-free claim process.

Section 80GGA provides a 100% tax deduction for donations made towards: 

• Scientific research institutions approved under Section 35(1)(ii)

• Institutions engaged in social science or statistical research

• Associations involved in rural development programs

• Institutions providing training for rural development

• Funds set up by the government for afforestation or poverty eradication

Eligibility:

• Available to all taxpayers except those with income from business or profession

Payment Modes:

• Donations must be made via cheque, draft, or digital payment

• Cash donations exceeding ₹10,000 are not eligible

Required Documents:

• Donation receipt with institution details and PAN

• Form 58A from the recipient institution

• Proof of payment

 

This section encourages contributions towards scientific and rural development initiatives.

• Verify Institution's Eligibility: Ensure the recipient institution is approved under Section 80G

• Maintain Proper Documentation: Keep all receipts and proofs of payment

• Understand Deduction Limits: Be aware of the percentage of deduction and any qualifying limits

• Avoid Cash Donations Over ₹2,000: Such donations are not eligible under Section 80G

• File Timely: Claim deductions in the appropriate assessment year