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

Section 80G of the Income Tax Act, 1961 allows taxpayers to reduce their taxable income by donating to approved charitable organisations. Donations to eligible institutions, such as NGOs or government relief funds, are eligible for tax deductions, with some qualifying for 100% tax exemption. Exemption applies to both individuals and businesses, subject to specific conditions and limits.

 

The Section 80G donation limit varies, with higher deductions available for contributions to certain funds like the Prime Minister’s Relief Fund. Taxpayers can claim deductions under both the old and new tax regimes, though the limits and conditions differ. Donations, whether in cash or kind, can provide significant tax relief, provided the proper documentation, such as the Section 80G donation receipt, is maintained.

Any taxpayer—whether salaried, self-employed, or a business entity—can claim a deduction under Sec. 80G. This deduction is applicable for donations made to specified charitable trusts or funds listed on the Section 80G exemption list. Salaried individuals can particularly benefit, as donations reduce taxable income, subject to the Section 80G donation limit for salaried persons.

 

To claim this tax deduction under Section 80G, it is mandatory to have a Section 80G donation receipt formatted according to income tax guidelines. This receipt must clearly state the donation amount, donor's name, and recipient organisation’s details for accurate documentation during tax filing.

You are eligible for a Section 80G deduction if you fulfil these simple conditions:

• You have made a tax-deductible donation to an organisation listed under the Section 80G exemption list

• Donations are made within the cash donation limit of ₹2,000 or through cheque, digital transfers, or online payments

• You have a valid Section 80G donation receipt, clearly showing your name, donation amount, and the recipient institution’s details

• Donations are made to organisations offering either 50% or 100% tax exemption on donation, such as the Prime Minister’s Relief Fund or the Maharashtra CM Relief Fund

• You understand the Section 80G maximum limit, typically allowing deductions up to 10% of your adjusted gross income

Any taxpayer—whether salaried, self-employed, or a business entity—can claim a deduction under Sec. 80G. This deduction is applicable for donations made to specified charitable trusts or funds listed on the Section 80G exemption list. Salaried individuals can particularly benefit, as donations reduce taxable income, subject to the Section 80G donation limit for salaried persons.

 

To claim this tax deduction under Section 80G, it is mandatory to have a Section 80G donation receipt formatted according to income tax guidelines. This receipt must clearly state the donation amount, donor's name, and recipient organisation’s details for accurate documentation during tax filing.

You are eligible for a Section 80G deduction if you fulfil these simple conditions:

• You have made a tax-deductible donation to an organisation listed under the Section 80G exemption list

• Donations are made within the cash donation limit of ₹2,000 or through cheque, digital transfers, or online payments

• You have a valid Section 80G donation receipt, clearly showing your name, donation amount, and the recipient institution’s details

• Donations are made to organisations offering either 50% or 100% tax exemption on donation, such as the Prime Minister’s Relief Fund or the Maharashtra CM Relief Fund

You understand the Section 80G maximum limit, typically allowing deductions up to 10% of your adjusted gross income

Here are the donation categories under Section 80G to help you maximise your tax savings while contributing to meaningful causes:

100% Deduction (No Limit)

These donations fully reduce your taxable income without any cap on the amount you can claim. Donations such as those to the Prime Minister’s National Relief Fund, PM CARES Fund, and the National Defence Fund fall under this category.

50% Deduction (No Limit)

Under this category, you can deduct half of the total amount you donate without any maximum limit. For example, donations to the Prime Minister’s Drought Relief Fund qualify for this deduction.

100% Deduction (Limited to 10% of Adjusted Gross Total Income)

Donations here fully qualify for deduction but only up to 10% of your Adjusted Gross Total Income (AGTI). Contributions to government projects promoting family planning or donations to certain sports organisations are eligible under this group.

50% Deduction (Limited to 10% of Adjusted Gross Total Income)

This category lets you deduct half your donation amount, restricted to 10% of your AGTI. Donations made for general charitable purposes or renovations of religious places like temples or churches are covered here.

Donation Type	Qualifying Donations	Deduction Allowed
100% Deduction (No Limit)	Prime Minister’s National Relief Fund and PM CARES fund National Defence Fund by Central Government National Foundation for Communal Harmony Approved university or educational institution of national eminence Zila Saksharta Samiti under Collector's chairmanship Fund by state government for medical relief to the poor National Illness Assistance Fund- National/State Blood Transfusion Council National Trust for Autism, Cerebral Palsy, Mental Retardation, Multiple Disabilities National Sports Fund National Cultural Fund Fund for Technology Development National Children’s Fund Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund Army Central Welfare Fund, Indian Naval Benevolent Fund, Air Force Central Welfare Fund Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996 Maharashtra Chief Minister’s Relief Fund (Oct 1–6, 1993)  Chief Minister’s Earthquake Relief Fund, Maharashtra Gujarat Government Earthquake Relief Fund 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	100% deduction under Section 80G
50% Deduction (No Limit)	Prime Minister’s Drought Relief Fund	50% deduction without any limit
100% Deduction (Limited to 10% of Adjusted Gross Total Income)	Donations to government/local authorities for family planning Donations by companies to Indian Olympic Association or notified sports institutions	100% deduction, capped at 10% of AGTI
50% Deduction (Limited to 10% of Adjusted Gross Total Income)	Funds or institutions meeting conditions under Section 80G(5)  Donations to government/local authorities for charitable purposes (excluding family planning) Authorities for housing, planning, or development of cities/towns/villages Corporations under Section 10(26BB) promoting minority interests Repairs or renovation of notified temples, mosques, churches, gurudwaras	50% deduction, capped at 10% of AGTI

Calculating your tax deduction under Section 80G involves identifying the correct category of your donation and applying the relevant deduction percentage. Donations under Section 80G fall into two main categories: 

• Without a qualifying limit

• With a qualifying limit

For donations without a qualifying limit, such as contributions to the Prime Minister’s Relief Fund listed under Section 80G 100% exemption list, you directly claim either 100% or 50% of the donated amount.

For donations with a qualifying limit, additional calculation is necessary. Such donations allow deductions of 50% or 100%, subject to the Section 80G maximum limit, which is typically 10% of your adjusted gross total income.

Follow these steps to calculate accurately:

• Gross Qualifying Amount: Total donations made to charities under the qualifying limit category

• Net Qualifying Amount: Restricted to 10% of your adjusted gross total income

• Deduction Under Section 80G: Claim 50% or 100% of your donation amount, limited to the Net Qualifying Amount

Ensure proper documentation by obtaining a valid Section 80G donation receipt formatted according to income tax guidelines.

To claim deductions under Section 80G, taxpayers must adhere to specified modes of payment recognised by income tax guidelines. Acceptable payment methods include cheque, demand draft, digital transfers such as NEFT or online banking, and cash donations within the prescribed cash donation limit of ₹2,000. It is critical to note that cash donations exceeding ₹2,000 are not eligible for tax deduction under Section 80G.

Additionally, in-kind contributions, including donations of food, medicines, clothes, or other materials, are not considered eligible for deductions. Proper documentation is essential, and thus obtaining a correctly formatted Section 80G donation receipt is necessary.

Key conditions for eligibility under Section 80G are:

Acceptable Payment Methods

• Cheque

• Demand Draft

• Digital transactions (online payments, bank transfers)

• Cash donations up to ₹2,000

Important Eligibility Rules

• Cash donations above ₹2,000 do not qualify for deductions

• In-kind donations do not qualify for deductions

• Deductions can be either 50% or 100% tax exemption on donation, depending on the institution listed under the Section 80G exemption list

To claim a tax deduction under Section 80G of the Income Tax Act, follow these clear steps:

1. Verify your donations qualify as tax deductible donations by ensuring the recipient organisation is listed on the official Section 80G exemption list

2. Obtain a valid Section 80G donation receipt from the recipient organisation, including details like the donation amount, your name, address, and the organisation’s Section 80G registration number

3. Identify the category of your donation:

• Donations with 100% deduction under Section 80G: Qualifies for full deduction, such as donations to the Prime Minister’s Relief Fund (Section 80G 100% exemption list)

• Donations with 50% deduction under Section 80G: Eligible for half deduction, such as donations to specific charitable institutions listed under Section 80G 50% exemption list

1. Perform your Section 80G deduction calculation accurately:

• For donations qualifying for donation 100% exemption, claim the entire donated amount

• For donations with 50% deduction, calculate half the donation amount

1. Clearly enter your donations in Schedule Section 80G of your Income Tax Return (ITR), ensuring correct details of amounts, organisations, and deduction limits

2. Retain all donation receipts and relevant documentation to provide proof during potential verification by the Income Tax Department

 

Essential Documents for Claiming Deduction Under Section 80G

To successfully claim your tax deduction under Section 80G, you must maintain specific documents as proof. These documents substantiate your claim for donations made to charitable institutions or funds listed under the Section 80G exemption list.

Here are the necessary documents you should have:

• Duly Stamped Section 80G Donation Receipt

A receipt issued by the recipient charitable institution, formatted according to the official Section 80G donation receipt format. It must include:

• Name, address, and PAN number of the charitable trust or institution

• The trust’s valid Section 80G registration number

• Name and address of the donor

• Exact donation amount clearly mentioned, distinguishing between cash (up to the cash donation limit of ₹2,000) or other modes

• Form 58

This form is required specifically for donations eligible for 100% tax exemption on donation. Without Form 58, your donation will not qualify fully under the Section 80G 100% exemption list.

• Photocopy of the Section 80G Certificate

Obtaining a photocopy of the charitable trust’s valid Section 80G tax exemption certificate helps confirm the trust’s eligibility status on the donation date.

Section 80GGA: Donations for Scientific Research and Rural Development

Section 80GGA of the Income Tax Act, 1961 allows individuals (excluding those with business income) to claim a 100% tax exemption on donations made for scientific research or rural development. Donations must be to approved research institutions, universities, or organisations conducting eligible activities. 

Contributions above the cash donation limit of ₹2,000 must be via cheque, draft, or digital transfer. To claim the deduction, ensure you maintain valid receipts clearly indicating the donation amount and the receiving institution’s details, thereby maximising your donation tax relief under Section 80GGA.

Donations Eligible for Deduction Under Section 80GGA

Donations qualifying under Section 80GGA are eligible for 100% tax exemption on donation if directed towards approved scientific research, statistical analysis, social sciences, or rural development. Eligible contributions include:

• Donations to Scientific Research Institutions: Institutions must be approved under Section 35(1)(ii) or 35(1)(iii)

• Donations to Universities and Colleges: Contributions to notified universities or colleges engaged entirely in scientific research, approved for TDS under Section 80GGA

• Donations to Research Associations: Associations conducting scientific research, approved under Section 35(1)(ii) or 35(1)(iii)

• Donations to Rural Development Projects: Contributions to institutions approved under Section 35CCA by the National Committee for rural development initiatives

• Donations for Statistical and Social Science Research: Contributions to associations conducting research in these fields, approved under the relevant tax sections

To effectively claim the 100% tax exemption on donation provided under Section 80GGA of Income Tax Act 1961, it is necessary to maintain specific documentation. Proper records help substantiate your eligibility for deductions related to contributions towards scientific research and rural development initiatives.

Essential documents include:

Donation Receipt

A valid receipt issued by the recipient institution. It should clearly state the organisation's registered name, taxpayer's name, exact donation amount, and the institution’s registration number.

Form 58A

This form is mandatory to claim a full deduction. Provided by the receiving organisation, it includes details such as the institution’s PAN, donated amount, and project specifics.

Proof of Payment

Though not compulsory, retaining payment records is highly recommended, especially for significant amounts, to facilitate verification by the tax authorities.

• Here are some crucial points you must consider when claiming your deduction under Section 80G:

• Confirm the recipient organisation is listed under the official Section 80G exemption list to ensure your donation qualifies for tax benefits

• Always collect and securely maintain essential documents like a stamped Section 80G donation receipt or Form 58, to support your claim during audits

• Donations exceeding the cash donation limit of ₹2,000 must be made through cheque, demand draft, or electronic transfers to qualify under Section 80G

• Accurately calculate your Section 80G deduction, identifying whether your donation qualifies for 100% tax exemption or a 50% deduction, based on the official exemption list

• Include complete donation details such as the organisation's PAN, address, and donation breakup when reporting your deduction in the Schedule 80G of your ITR