Section 80G Deduction – Tax Deduction for Donations

Donations have been a part of Indian culture for eternity. Section 80G deduction under the Income Tax Act recognises and summarises this culture and aims to reward the donors for their generous acts.

So, section 80G deduction will apply to the donations made to a recognised institution, charitable trust, or any other registered public welfare body in India.

What is the Qualifying Limit for Section 80G?

Deduction under section 80G is subject to the qualifying limit of your income. The qualifying limit for claiming section 80G deduction is 10% of your Adjusted Gross Total Income. Adjusted Gross Total Income is your taxable income without Capital Gains and Exempted Income.

Example of Qualifying Limit calculation:

Ravichandran has reported a Gross Total Income of Rs 15 lakhs for FY 2022-23, which includes Capital Gains, Allowances, and Income under Section 115. Here’s how much he can claim under Section 80G:

Ravi can claim up to Rs 1 lakh as a deduction under section 80G. However, this qualifying limit does not affect his limit of donations.

80G Eligibility Criteria for Donations

Your donations must meet the conditions specified in the Income Tax Act to qualify for deduction under section 80G. Here are the three most important conditions:

• Cash Donation Limit

Cash donations should not exceed Rs 2000 in a financial year. After 1 April 2017, any cash donations exceeding Rs 2000 cannot be claimed as a section 80G deduction.

• Donation Receipt (Anonymous Donations)

You must collect a donation receipt with the details like Name, PAN, Address, Registration Number, and Validity of Registration u/s 80G. The donation receipt must also contain details of the donor, such as Name, Address, and Amount Donated.

• Form 58 for 100% Deductible Donations

Whenever you donate to an Institution eligible for a 100% deduction, you must receive a Form 58 from the Institution. Without this form, your donation will not be qualified for a 100% deduction.

Donations with 100% Deductibility w/o Qualifying Limit

Your donations to the following entities will qualify for a 100% deduction regardless of the Qualifying Limit:

1. A University or  Educational Institution of national eminence approved by the prescribed authority on this behalf
2. Africa (Public Contributions – India) Fund
3. Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund established by the armed forces of the Union for the welfare of the past and present members of such forces, or their dependants
4. Chief Minister’s Earthquake Relief Fund, Maharashtra
5. Clean Ganga Fund, set up by the Central Government
6. Fund for Technology Development and Application set up by the Central Government
7. A fund set up by the state Government to provide medical relief to the poor
8. A fund set up by the State Government of Gujarat exclusively for providing relief to the victims of the earthquake in Gujarat
9. National Blood Transfusion Council or any State Blood Transfusion Council which has its sole object the control, supervision, regulation, or encouragement in India of the services related to the operation and requirements of blood banks
10. National Children’s Fund
11. National Cultural Fund set up by the Central Government
12. National Defence Fund set up by the Central Government
13. National Foundation for Communal Harmony
14. National Illness Assistance Fund
15. National Sports Fund set up by the Central Government
16. National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities
17. Prime Minister’s Armenia Earthquake Relief Fund
18. Prime Minister’s National Relief Fund
19. Swachh Bharat Kosh, set up by the Central Government
20. The Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
21. The Chief Minister’s Relief Fund for a State or the Lieutenant Governor’s Relief Fund in for a Union Territory
22. The National Fund for Control of Drug Abuse constituted under section 7A of the Narcotic Drugs and Psychotropic Substances Act, 1985
23. Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district for:
    • The improvement of primary education in the villages and towns in such district
    • Literacy and post-literacy activities
    • Town means a town with a population not exceeding One Lakh as per the last census

Donations with 50% Deductibility w/o Qualifying Limit

50% of the donations made to the following institutions will qualify for a section 80G deduction in the financial year:

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

That means if you donate Rs 1 lakh to any one or more of the listed Institutions, you can claim a deduction of Rs 50,000. The qualifying limit does not affect your deduction amount for these institutions.

Donations with 100% Deductibility with Qualifying Limit

Any donation to an approved government or non-government body working for Family Planning will qualify for a 100% deduction under section 80G. This donation is subject to the qualifying limit, i.e., 10% of your adjusted Gross Total Income for the financial year.

Donations with 50% Deductibility with Qualifying Limit

Donations made to any of the following Institutions, including registered institutions not falling under any other category above, will qualify for a 50% deduction u/s 80G:

1. An Authority constituted in India by or under any law enacted either to deal with and satisfy the need for Housing Accommodation or the purpose of Planning, Development, or Improvement of cities, towns, villages, or both.
2. Any Corporation for promoting the interest of the Minority Community.
3. Any Fund or any Institution established for Charitable purposes and approved by the Commissioner of Income-Tax, which is constituted as a
   • Public Charitable Trust; or
   • Registered under the Societies Registration Act, of 1860; or
   • Registered under section 8 of the Companies Act, 2013; or
   • University established by law, or is any other Educational Institution recognised by the Government or by a University established by law, or affiliated to any University established by law; or
   • Is An Institution financed wholly or partly by the Government or a local authority
4. Donations for the renovation or repair of any such Temple, Mosque, Gurudwara, Church, or other places  notified by the Central Government in the Official Gazette to be of historical, archaeological, or artistic importance or to be a place of public worship of renown throughout any State or States
5. Government or any local authority (charitable purposes other than family planning objectives)

Maximise Tax Saving with Other Deductions

While 80G deductions may result from your noble intentions, you should consider saving tax under other sections between 80C and 80U. Investments under section 80C will be pretty helpful in reducing your future tax liability and meeting your financial goals.

Such deductions are also available on the premiums paid for essentials like Term Insurance, and Health and Accidental Insurance plans.