Section 80G Deduction
Charitable organisations, NGOs, Government-backed societies, and relief funds, work towards the good cause of society by helping the needy and poor. Many people make their generous contribution towards the cause and help these Charitable organisations, NGOs, Government-backed societies, and relief funds run tirelessly, and to encourage more people to donate, the Government of India provides these donations as tax deductions under Income Tax Act, 1961.
What is Section 80G?
Section 80G under Income Tax Act, 1961 let taxpayers claim a tax deduction of the amount which they donated towards certain funds, charitable institutions, etc.
When filing Income Tax Returns (ITR) taxpayer has to provide proof of the donation, along with certain prerequisite documents to claim the tax deduction. Organizations, Funds, NGOs, etc. have to register themselves with GOI and get an 80G certificate to get tax-deductible donations. All of the organizations, NGOs, Funds, Societies, etc. which are eligible for tax deductions and are registered with GOI are prior notified to citizens. Donors have to check whether the amount which they are donating is eligible for deduction or not under Section 80G.
Who can avail the deduction?
All taxpayers are allowed to avail benefits of Section 80G deductions. Even NRIs can avail of these benefits provided that they are donating to an eligible organization. All taxpayers and NRIs are subject to limits set by GOI.
- Max donation of ₹2000 can be availed in tax deduction if the donation is made in cash. Any donation more than ₹2000 paid in cash, is not eligible for a tax deduction.
- Donation made in form of a kind e.g., Clothes, food, shelter is not deductible under Section 80G, only monetary donations are deducted under this section.
- Donations are to be made from taxable or tax-exempt income only, donations made from non-taxable income are not deductible.
- Donations made to other than certified organizations under sections 80G deduction are not eligible for deduction. For instance, a donation made to any local NGO cannot be deducted as local NGOs are not Section 80G certified.
Limits of Deductions
There are two limits set by GOI under which deductions can be claimed
- 100% Deduction: - Charities, NGOs, Government relief funds, etc. which are certified by the government for 100% deduction without any cap on donation amount comes under this. National Defence Fund set up by the Central Government, Prime Minister's National Relief Fund, National Sports Fund, National Cultural Fund, etc. are some of the funds which are eligible for 100% tax deduction without any cap on the donation amount.
E.g., Suppose you paid ₹50,000 as a donation towards the National Sports fund, you can claim a tax deduction of entire ₹50,000 under Section 80G.
You can refer to the full list of funds, organizations that are eligible for 100% deduction without any limit on the income tax department website.
- 50% Deduction: - Charities, NGOs, Government relief funds, etc. which are certified by the government for 50% deduction without any cap on donation limit amount comes under this. Jawaharlal Nehru Memorial Fund, Prime Minister's Drought Relief Fund, Indira Gandhi Memorial Trust, Rajiv Gandhi Foundation are eligible for 50% deduction without any donation limit.
E.g., Suppose you paid ₹50,000 as a donation towards Rajiv Gandhi Foundation, you can avail 50% of the amount as tax-deductible i.e., ₹25,000.
- 100% Deduction subject to 10% of Adjusted Gross Total Income
Donations made to any approved local authority for purpose of family planning and donation made to the Indian Olympic Association come under this category. But the deduction amount is restricted to only 10% of adjusted gross total income. Amount exceeding 10% of AGTI does not get deducted under this category.
For Instance: - Suppose your adjusted gross total income is ₹1,00,000, 10% of it would be ₹10,000 i.e., taxpayers can avail a deduction of max ₹10,000 while donating to the above-mentioned institutions. You donated ₹15,000 in the particular fiscal year towards local authority which works for family planning, as the maximum, you can avail ₹10,000, the Tax deduction will be only ₹10,000, and ₹5,000 would not be eligible.
- 50% Deduction subject to 10% of Adjusted Gross Total Income
Donations made to any corporation referred to in Section 10(26BB) for promoting the interest of the minority community, for repairs or renovation of any notified temple, mosque, gurudwara, church, or other places (refer to Income tax website for more). Likewise, the deduction amount is restricted to 10% of the adjusted gross total income.
For instance: - The same example as before, you made ₹20,000 as a donation towards repairs of gurudwara, you can get this amount tax deducted under section 80G, but as your 10% of ATGI is ₹10,000, so max ₹10,000 can be deducted under this category, 50% of ₹10,000 would be ₹5,000 and thus ₹5,000 would be tax deducted and ₹15,000 would not be deducted as per the condition of Section 80G.
Documents Required to Avail Benefits under Section 80G
- Duly stamped receipt of the donation made, it should include donors name, PAN number of trust, address, donation amount.
- Form 58, if the donor is availing 100% deduction under without limit category.
- Registration number of trust
ADJUSTED GROSS TOTAL INCOME CALCULATION
(-) STCG (u/s 111A)
(-) All deduction u/s 80C to 80U except 80G