What is a Section 80G Tax Exemption?
Section 80G of the Indian Income Tax Act encourages charitable giving by providing tax deductions for donations made to certain institutions. Therefore, you can reduce your taxable income by the amount you donate, potentially lowering your total tax bill. However, there are limitations and demands for qualified contributors and institutions.
The Government of India encourages charity and social welfare through various tax incentives. One such incentive is Section 80G of Income Tax Act 1961. Understanding the eligibility criteria and scope of incentives available under this section can be crucial for increasing tax savings while supporting good causes.
Who Can Claim 80G Deductions?
Individuals - Both salaried and self-employed individuals can claim deductions.
Hindu Undivided Families (HUFs)
Companies - Corporate entities donating to eligible funds or institutions.
Firms, Partnerships, and LLPs can also claim deductions.
Association of Persons (AOP) and Body of Individuals (BOI) – These entities can benefit under this section.
Eligibility Criteria for Claiming 80G Deduction
To encourage charitable giving, the Government of India offers tax benefits under Section 80G of the Income Tax Act. Understanding the eligibility criteria is essential to ensure your donation qualifies for this deduction.
1. Mode of Payment
Donations must be made by cheque, draft, or electronic means (credit card, net banking, UPI, etc.).
Cash donations beyond ₹2,000 are not eligible for deductions. Previously, the cap was ₹10,000, but it was dropped to promote transparency.
Donations in kind (food, clothing, medications, etc.) are not eligible for deductions under Section 80G.
2. Donations to Approved Institutions and Funds
Donations given to organisations certified by the Income Tax Department are eligible for Section 80G deduction. Some examples include:
Donations Eligible for 100% Deduction Without Limit
Prime Minister’s National Relief Fund (PMNRF)
National Defence Fund
Chief Minister’s Relief Fund
National/State Blood Transfusion Council
Swachh Bharat Kosh
Clean Ganga Fund
Donations Eligible for 50% Deduction Without Limit
Jawaharlal Nehru Memorial Fund
Prime Minister’s Drought Relief Fund
Indira Gandhi Memorial Trust
Rajiv Gandhi Foundation
Donations Eligible for 100% Deduction Subject to 10% of Adjusted Gross Total Income
Government or Local Authority funds for promoting family planning
Indian Olympic Association
Donations Eligible for 50% Deduction Subject to 10% of Adjusted Gross Total Income
Any other fund or institution approved by the government for charitable purposes
Local authorities for the promotion of sports and development
3. Documentation Requirements
To claim the deduction, taxpayers must obtain the following documents:
Donation Receipt: The receipt should include the recipient organisation's name, address, PAN, donation amount, and the institution's registration number.
Form 58 (For 100% deduction cases): If you want to claim a 100% deduction for a certain institution, you must complete this form.
80G Registration Number: The entity receiving the donation must have a valid 80G registration, and donors should check the status before donating.
4. Impact of Adjusted Gross Total Income
For deductions limited to 10% of Adjusted Gross Total Income (AGTI), any excess donation in this limit cannot be claimed in the current fiscal year but can be carried forward for up to four years.
How to Claim 80G Deduction in Income Tax Return (ITR)?
Claiming deductions under Section 80G exemption provides a significant tax benefit while encouraging contributions to charitable organisations. Individuals and businesses who donate to eligible funds can claim these deductions in their Income Tax Returns (ITR). To ensure compliance and maximise tax savings, it is essential to follow the correct procedure for claiming deductions under the 80G exemption.
Claiming an 80G deduction is straightforward:
Donate to an eligible fund or organisation and collect the receipt.
Verify 80G Registration of the recipient.
Declare donations in the ITR while filing tax returns.
Provide necessary details in Schedule 80G of the ITR form, including the name of the organisation, PAN, and amount donated.
It’s important to ensure that your donation is properly documented and made through valid payment modes such as cheque, demand draft, or digital payment—cash donations above ₹2,000 are not eligible for deduction. Keeping accurate records not only ensures a smooth claim process but also reinforces transparency in charitable giving.
Common Misconceptions About 80G Deductions
Despite the tax benefits available under Section 80G of the Income Tax Act, many people have misconceptions about how deductions function. Misunderstanding eligibility, deduction limits, and authorised contribution methods might result in errors when claiming tax benefits. Clearing up these myths ensures that contributors maximise their deductions while staying within tax restrictions.
Bal Raksha Bharat (also known as Save the Children India) is a reputable and registered child rights organisation eligible for tax benefits under Section 80G of the Income Tax Act. Donations made to this trusted charity directly support critical initiatives in child welfare, education, healthcare, and emergency relief.
Recent Amendments and Changes in 80G Deduction
In recent years, the government has introduced several reforms to improve transparency and accountability in claiming deductions:
Compulsory digital payments for donations above ₹2,000.
Mandatory disclosure of the recipient’s PAN and registration details in the ITR.
Online verification of 80G registration before making donations.
Increased Scrutiny of NGOs and Charitable Trusts: The government now mandates the re-registration of all charitable institutions under new guidelines to maintain their 80G status.
Introduction of Unique Registration Number (URN): Every NGO seeking 80G benefits must obtain a URN from the Income Tax Department to ensure compliance and transparency.
Quarterly Reporting by Charitable Institutions: Organisations approved under Section 80G are required to submit details of donations received to the government to prevent fraudulent claims.
Pre-Filled ITR Forms for Donors: Donations made to registered charities are now reflected in pre-filled tax return forms, simplifying the deduction claim process for taxpayers.
Conclusion
Section 80G is a powerful tool for individuals and businesses to contribute to society while enjoying tax benefits. However, it is essential to ensure compliance with all eligibility requirements, documentation, and applicable limits. By choosing registered institutions and maintaining proper records, taxpayers can maximise their deductions while supporting social causes effectively through the 80G deduction.
The 80G of Income Tax Act provides a structured framework to encourage charitable donations, ensuring that funds are directed toward approved organisations and used for social welfare. By leveraging the 80G exemption, taxpayers can reduce their taxable income while making a meaningful impact on society.
