An individual can claim tax deduction under section 80G of the Income tax act, 1961 for donations made during the financial year to certain specified institutions. Tax deduction under section 80G can be claimed only if you have opted for the old tax regime. If you have opted for a new tax regime, then benefits of Section 80G will not be allowed.
In this article, let us discuss how section 80G can save your tax and what are the conditions you must look in to get tax deduction.
Who can claim income tax deduction under section 80G
An individual who has donated money to a prescribed institution or association is eligible to claim tax deduction from his/her gross total income before levy of tax. Both resident and non resident individuals can take benefits of section 80G.
However, as discussed above, if you have opted for the new tax regime, then income tax deduction will not be allowed to you.
Even companies, partnership firms, HUF and other persons are eligible for section 80G income tax deduction. But our main focus in this article will be restricted to individuals.
Steps to claim tax deduction for donations under section 80G
We have four different types of tax deduction allowed under section 80G. Here are they;
- 100% tax deduction without any maximum limit
- 50% tax deduction without any maximum limit
- 100% tax deduction subject to a maximum limit
- 50% tax deduction subject to a maximum limit
To claim income tax deduction under section 80G, you need to first check the category to which the institution belongs to know the tax deduction percentage and qualifying limit.
As stated above, we have certain institutions where you are allowed to claim 100% or 50% income tax deduction without any maximum limit. In certain other cases, we have something called the maximum limit. Let us first learn what the maximum limit is.
If the total amount donated by you to these institutions exceeds 10% of your adjusted gross total income, then an amount exceeding 10% of your adjusted gross total income will not be eligible for income tax deduction under section 80G.
Adjusted gross total income is calculated by after deducting followings from taxpayer’s gross total income;
- (a) Tax deductible claimed under Section 80C to 80U (Except Section 80G)
- (b) Share of profit in Association of Persons (AOP) eligible for rebate under Section 86
- (c) Long-term capital gains (LTCG)
- (d) Short-term capital gain (STCG) arising from securities specified under Section 111A
- (e) Any income referred to in Sections 115A, 115AB, 115AC, 115ACA, 115AD and 115D
Mode of donation to claim income tax deduction under section 80G
Three modes of payments for donations are allowed to claim tax deduction under section 80G: Cash, Cheque and electronic mode.
However, cash donations exceeding 2,000 rupees are not allowed for income tax deduction under section 80G. You need to make sure that donations should be paid by any mode other than cash in case the amount of donation exceeds 2000 rupees.
Even donations made in kind such as food, clothes, medicines are not allowed to take benefits of section 80G.
How to claim tax deduction for donations under section 80G
If you satisfy all the conditions of section 80G, then you need to file your income tax return to claim tax deduction under section 80G.
Following details are required while filing taxpayer’s income tax return;
- Name of the donee
- PAN of the donee
- Address of the donee
- Amount of contribution – the breakup of contribution in cash and another mode
- The amount eligible for deduction
Institutions are required to file a donation statement with the income tax department and provide the donor a certificate in form 10BE specifying the amount donated for the financial year.
Form 10BE acts as evidence to support the tax deduction claim while filing income tax return.
Taxpayers are also required to have a duly stamped receipt in order to take tax deduction under section 80G. Duly stamped receipt issued by the institution. Such receipt should have name, address, Registration number of the institution, amount donated, PAN number of the institution. While taking the receipt you should make sure that the institution is approved and it has the registration number printed on it.
All institutions registered for section 80G tax deductions are required to upload all the donation details to the Income Tax website under form 10BD and generate a certificate as per form 10BE. These institutions periodically will send you this certificate. These donation certificates serve as proof that the money donated by you has been received by the NGO and is eligible for the income tax deduction under Section 80G.
The statement of donation in Form 10BD must be filed on or before 31st May of the financial year immediately following the year in which the donation was received.
For the financial year 2023-24, the statement of donation in form 10BD has to be filed with the government on or before 31st May 2024 being the deadline for filing such a statement. When a taxpayer files their income tax return for the financial year 2023-24 (assessment year 2024-25), then the details as in the certificate issued in form 10BE need to be keyed in the ITR.
These donation certificates will work just like TDS certificates.
List of funds eligible for 100% tax deduction without any maximum limit
(i) National Defence Fund
(ii) PM National Relief Fund
(iii) PM Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND)
(iv) National Children’s Fund
(v) CM Relief Fund or the Lieutenant Governor’s Relief Fund
(vi) Zila Saksharta Samiti
(vii) Army Central Welfare Fund
(viii) Indian Naval Benevolent Fund
(ix) Air Force Central Welfare Fund
(x) Andhra Pradesh CM Cyclone Relief Fund
(xi) National Sports Fund
(xii) National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
(xiii) Swachh Bharat Kosh (not being in pursuance of CSR)
(xiv) Clean Ganga Fund (not being in pursuance of CSR) – Only to the resident assessee
(xv) National Fund for Control of Drug Abuse
(xvi) National Illness Assistance Fund
(xvii) National Blood Transfusion Council or State Blood Transfusion Council
(xviii) Fund set up by a State Government for the medical relief to the poor
(xix) National Cultural Fund
(xx) Fund for Technology Development and Application
(xxi) National Foundation for Communal Harmony
(xxii) PM Armenia Earthquake Relief Fund
(xxiii) Africa (Public Contributions – India) Fund
(xxiv) CM Earthquake Relief Fund, Maharashtra
(xxv) An university or educational institution of National eminence approved by the tax authorities
(xxvi) Fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat.
Funds eligible for 50% income tax deduction without the maximum limit
(i) Jawaharlal Nehru Memorial Fund
(ii) PM Drought Relief Fund
(iii) Indira Gandhi Memorial Trust
(iv) Rajiv Gandhi Foundation
As per the amendments made by The Finance Act of 2023 in Section 80G, donations made to the following name-based funds will no longer be eligible for deduction under Section 80G:
- Jawaharlal Nehru Memorial Fund;
- Indira Gandhi Memorial Trust, and
- Rajiv Gandhi Foundation.
Therefore, any donations made to above three funds on or after 01/04/2023 will not be eligible for income tax deduction under this provision.
Funds eligible for 100% income tax deduction subject to the maximum limit
(i) Family Planning Association of India/Red Cross Society of India
(ii) Government or any approved local authority, institution or association to be utilised for the purpose of promoting family planning.
(iii) Indian Olympic Association or to any other notified association or institution established in India for the development of infrastructure for sports and games in India or the sponsorship of sports and games in India. However, the deduction for donations to these institutions is allowed only to a company and not to individuals.
Funds eligible for 50% income tax deduction subject to the maximum limit
(i) Notified temple, mosque, gurudwara, church or other place (for repairs or renovation)
(ii) Government or any local authority to be utilised for any charitable purpose other than the purpose of promoting family planning
(iii) Any corporation specified in Section 10(26BB) for promoting interest of minority community
(iv) Any authority constituted in India either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or both.
(v) Any other fund or any institution fulfilling the conditions as specified in Section 80G(5)
Before giving a donation, you must make sure that the institution to which you are donating is in the government approved list.
Frequently Asked Questions on Section 80G
I have donated Rs 10,000 to a trust in cash. As per the receipt and list the trust is qualified for a deduction under section 80G. Can I claim a tax deduction under section 80G for the whole amount of Rs 10,000 while filing my income tax return?
No, as per the provision of Section 80G, donations made over Rs 2,000 in cash won’t qualify for a tax deduction under section 80G, so you cannot claim a deduction for the same.
I have donated to a trust. Can I claim tax deduction if I opt for the new taxation regime?
No, tax deduction under section 80G is allowed if you opt for the old tax regime. In the new tax regime, you can not take benefits of section 80G for your donation.
I have donated money to a foreign trust, can i claim tax deduction?
No, donation to a foreign trust is not allowed for tax deduction u/s 80G.
Do I need to submit hard copies of the donation receipt to claim a deduction under Section 80G?
No, you are not required to submit the hard copies of the donation receipt while filing your income tax return.However, you need to keep these with you so that it can be furnished to the Assessing Officer if required during the assessment.
How to find out whether the institution is approved by the Government of India to get section 80G tax deduction?
Here is the link to find out the list of exempted Institutions.
Can you claim tax deduction under Section 80G through your employer?
Yes, you only if such a donation has been made from your salary.
