Section 80G of the Income Tax Act

Section 80G of the Income Tax Act, of 1961, was introduced to provide tax deductions to citizens who donate to charitable organizations. These contributions are channeled towards the welfare of the less fortunate and needy sections of the society. To foster goodwill among citizens and taxpayers alike, the government has made certain provisions through this section. 

You can claim tax deductions on the charitable donations made within the given fiscal year when you file your Income Tax Return (ITR). Moreover, there is no upper limit on the amount of your tax-deductible donation when you file an ITR for a specific number of charities.

According to Section 80G of the Income Tax Act, of 1961, you can claim a tax deduction on the charitable donations or contributions made within the given fiscal year when you file your income tax return (ITR). This means that you fall in a lesser tax bracket and hence, your tax liabilities will be mitigated. One of the unique features of Section 80G is that there is no maximum limitation on the amount of your tax-deductible donation when you file an ITR for a specific number of charities.

To claim deductions under Section 80G, it’s crucial that you submit proof of the donations. Once a contribution has been made, ensure that you collect a receipt from the charity or fund. 

However, make sure that the receipt contains the below-listed details: 

• Name of the donor 

• Amount donated 

• Benefactor’s name 

• Benefactor’s address 

• Benefactor’s PAN 

• Registration number of the organization

According to Section 80G of the I-T Act, deductions for donations can be claimed under the below-mentioned categories:

• Donations with no upper limit

50% or 100% of the total contribution made is deductible depending on the charitable organization’s eligibility, with no other limitation.

• Donations with an upper limit

50% or 100% of the total contribution can be deducted, subject to the charitable organization’s eligibility. You must note that the deducted amount in this type is limited to only 10% of your gross total income.

To claim tax deductions under Section 80G of the Income Tax Act, you will have to submit the following documents: 

• Stamped Receipt

This document serves as evidence of your donation. Including the registration number of the trust on the receipt is necessary for validation. This ensures that the trust is legitimate and registered with the tax authorities. 

• Form 58 

The form provides information about the trust's registration with the Income Tax Department. Moreover, it’s an essential document that a donor must furnish if they intend to claim a 100% deduction on the donated amount. 

• Photocopy of 80G Certificate

A photocopy of the 80G certificate is required to confirm that the trust qualifies for tax exemption, making your donation eligible for deduction. You must ask for a photocopy while getting a receipt for the donation. 

This thorough documentation is necessary for a smooth and legitimate process when claiming deductions under Section 80G. It not only safeguards your claim during tax assessments but also contributes to transparency in the charitable donation process.

While filing the income tax returns, you may confuse Section 80G with 80GGC or GGB. Although these three sections are associated with tax deductions for donations or contributions made in the previous financial year, they differ in the following aspects:  

• Section 80G: Tax deductions for donations made to charitable organisations or trusts

• Section 80GGB: Tax deductions for donations made to the political parties or electoral trusts by registered Indian corporations

• Section 80GGC: Tax deductions for donations made to political parties by other categories of taxpayers, like individuals, HUFs, etc.

Below is a list of donations that are eligible for tax deductions under sections 80G:

• Prime Minister's National Relief Fund

• National Illness Assistance Fund

• Relief Fund of the Chief Minister or the Lieutenant Governor (any UT or state)

• National Sports Fund

• National Trust for Welfare of Persons with Autism, Mental Retardation, Cerebral Palsy, and several disabilities

• National Foundation for Communal Harmony

• An approved university/educational institution of National eminence

• Indian Naval Benevolent 

• Air Force Central Welfare

• Army Central Welfare Fund

• Cyclone Relief Fund of the Andhra Pradesh Chief Minister in 1996

• Africa (Public Contributions - India) Fund

• Chief Minister's Earthquake Relief Fund, Maharashtra

• Swachh Bharat Kosh 

• Fund for Technology Development and Application

• Any fund that the State Government of Gujarat sets up primarily for the provision of relief to the victims affected by the earthquake in Gujarat

• National Children's Fund

When you file your ITR, you must provide the below-mentioned details:

• Name of the donee

• PAN of the donee

• Address of the donee

• Deducted amount

• Contributed amount

These details are required to be entered in Tables, A, B, C, or D.

There are a few terms and conditions you must know before claiming the tax deductions u/s 80G. Three of them are as follows:

• If the contribution is over ₹2,000 and made in cash, it’s not eligible for deduction as per Budget 2017 

• If the contributions are made in kind, they are not eligible for tax deductions 

• If the contributions are made to foreign trusts, they are not eligible for tax deductions

The deductions that are applicable u/s 80G of the IT Act can be claimed only when the donations or contributions are made via a draft, cash, or cheque. If the donation is made in kind, you will not be eligible to claim a deduction under this section. Cash donations above Rs. 2000 are not included in the deduction calculation u/s 80G. Hence, in order to claim this deduction, you must donate an amount of more than Rs. 2000.

If you wish to claim tax deductions under Section 80G, you must meet the below eligibility criteria:

• You must be an Indian resident or Non-resident Indian (NRI)

• You must be a part of a Hindu Undivided Family (HUF), company, or firm 

However, if you have chosen the new tax regime, then this deduction will not be available for you. 

If you have made any contributions to charitable organisations or funds in a given financial year, you can claim deductions for the donation made. Section 80G is a great alternative to the typical tax-saving instruments one may opt for. This section also promotes and encourages acts of charity by incentivizing it with such deductions. 

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