✨ Unlock Tax Savings: Your Guide to Section 80G on Charitable Donations! ✨

Did you know your generosity can trim your tax bill? India’s Income Tax Act, 1961, isn’t just about collecting taxes; it’s also about encouraging good deeds! Through Section 80G, it offers a fantastic opportunity to claim a deduction from your Gross Total Income for those heartfelt monetary donations to approved charities and funds.

Unlike deductions tied to personal savings or specific expenses, Section 80G offers a unique tax benefit directly linked to your charitable giving. It’s a win-win: you support vital causes and reduce your tax liability!

What Exactly is Section 80G? (The Big Picture)

At its core, Section 80G allows taxpayers to subtract eligible monetary donations made during the financial year from their Gross Total Income (GTI).

Let’s break down some key terms:

• Gross Total Income (GTI): Think of it as your total earnings from all sources (salaries, property, business, capital gains, etc.) before most deductions.
• Deduction: This is the magic number that gets taken off your GTI, ultimately lowering your Total Taxable Income – the amount on which your tax is actually calculated.
• Chapter VI-A: This is the special section in the Income Tax Act (covering Sections 80C to 80U) that lists all these awesome deductions.

The primary goal here is clear: provide tax relief to individuals and organizations that contribute to national funds, relief efforts, and registered charitable institutions, fostering social welfare and development across India.

Who Gets to Claim This Deduction? 🤔

Here’s the best part: the Section 80G deduction is available to ANY Assessee! 🎉

This means it’s not just for individuals. If you’re any of these, you’re in:

• Individuals
• Hindu Undivided Families (HUFs)
• Companies
• Firms
• Limited Liability Partnerships (LLPs)
• Associations of Persons (AOPs)
• Bodies of Individuals (BOIs)
• any other person liable to pay income tax!

This broad eligibility sets Section 80G apart from many other Chapter VI-A deductions (like 80C, 80D, 80E), which often have stricter rules about who can claim them.

What Kind of Donations Qualify?

Not all donations qualify for Section 80G. Here are the golden rules for eligibility:

1. Approved & Registered Donee: Your donation must go to a fund or institution that’s specifically approved and registered under Section 80G of the Income Tax Act. Always ask for their 80G registration certificate – it’s your proof!
2. Monetary Only: This is crucial! The donation must be in the form of money. Think cash, cheque, bank transfer, UPI, etc. Donations “in kind” (like clothes, food, medicines, vehicles, or property) are NOT eligible for deduction under Section 80G.

Donation Categories & Deduction Limits: How Much Can You Deduct?

Eligible monetary donations are sorted into four categories. The category determines the percentage of your donation that’s deductible and whether it’s subject to a further limit based on your income.

Category 1: 100% Deduction Without Any Qualifying Limit (No Limit on Donor’s Income)

• Nature: Donations to certain government funds or relief funds of national importance.
• Deduction: 100% of the donated amount.
• Examples:
  • National Defence Fund
  • Prime Minister’s National Relief Fund (PMNRF)
  • National Foundation for Communal Harmony
  • Approved university or educational institution of national eminence
  • National Illness Assistance Fund
  • National Blood Transfusion Council
  • National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Sclerosis
  • National Sports Fund
  • National Cultural Fund
  • Fund for Technology Development and Application
  • National Children’s Fund
  • Prime Minister’s Armenia Earthquake Relief Fund
  • Africa (Public Contributions – India) Fund
  • Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund in any State or Union Territory
  • Any fund set up by a State Government for medical relief to the poor
  • National Illness Assistance Fund
  • National Disaster Response Fund (NDRF)
  • PM CARES Fund (Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund)
  • Fund for control of drug abuse

Category 2: 50% Deduction Without Any Qualifying Limit (No Limit on Donor’s Income)

• Nature: Donations to certain specific funds established by the government.
• Deduction: 50% of the donated amount.
• Examples:
  • Jawaharlal Nehru Memorial Fund
  • Prime Minister’s Drought Relief Fund
  • Indira Gandhi Memorial Trust
  • Rajiv Gandhi Foundation

Category 3: 100% Deduction Subject to a Qualifying Limit (10% of Adjusted Total Income)

• Nature: Donations to the Government or any local authority for the purpose of promoting family planning, or donations by a company to the Indian Olympic Association or other notified associations for development of infrastructure for sports/games in India.
• Deduction: Limited to 100% of the donated amount OR 10% of the assessee’s Adjusted Total Income, whichever is less.

Category 4: 50% Deduction Subject to a Qualifying Limit (10% of Adjusted Total Income)

• Nature: Donations to any other fund or institution (like a registered charitable trust, society, or institution) approved under Section 80G, or donations to the Government or any local authority for any charitable purpose other than family planning.
• Deduction: Limited to 50% of the donated amount OR 10% of the assessee’s Adjusted Total Income, whichever is less.

What is Adjusted Total Income?

The ‘Adjusted Total Income’ for the purpose of Section 80G (and Section 80GGA/80GGC) is calculated as:

Gross Total Income (GTI)−All deductions under Chapter VI-A (except Section 80G)−Certain incomes subject to special tax rates (e.g., LTCG under Section 112, STCG under Section 111A)+Any deduction claimed under Section 57(iv) for interest on compensation

This calculation is relevant only for donations falling under Categories 3 and 4.

Payment Method: How to Donate for Deduction

To be eligible for deduction under Section 80G, donations must comply with specific payment method rules:

• Any donation exceeding ₹2,000 must be made by any mode other than cash (e.g., cheque, demand draft, online transfer, UPI, debit card, credit card).
• Cash donations of ₹2,000 or less are eligible for deduction.

Proof of Donation is Mandatory! 📝

To claim deduction under Section 80G, you must obtain and keep a valid stamped receipt from the eligible fund or institution. This receipt serves as proof of your donation.

The receipt should ideally contain the following details:

• Name, address, and Permanent Account Number (PAN) of the trust/institution.
• Registration number of the trust/institution granted under Section 80G.
• Name and address of the donor.
• Amount of donation received.
• Mode of payment (cash/cheque/online etc.).
• PAN of the donor (especially required for larger donations or as per institution’s policy).

For donations to certain government funds (like PMNRF, NDRF), the acknowledgement receipt, bank deposit slip, or online transaction confirmation may serve as proof.

How to Claim Section 80G Deduction: Your Checklist

To claim the deduction under Section 80G, follow these steps:

1. Verify Eligibility: Ensure you have made eligible monetary donations to approved entities and have valid receipts.
2. Categorize Donations: Classify each donation into the correct category (100% no limit, 50% no limit, 100% with limit, 50% with limit).
3. Calculate Adjusted Total Income: If you have donations in Categories 3 or 4, calculate your ‘Adjusted Total Income’.
4. File ITR: In your annual Income Tax Return (ITR), declare the total amount of eligible donations under each category in the specific fields provided.
5. Auto-Calculation: The tax software/system will automatically calculate the allowable deduction based on the rules and limits (including the Adjusted Total Income limit if applicable).
6. Keep Records: Keep all donation receipts safely; they must be produced if requested by the Assessing Officer.

Examples: Putting Section 80G into Practice

Example 1: Simple Mix of Donations

Mr. Sharma (Individual) has a GTI of ₹10,00,000. He made the following donations in PY 2024-25 (all non-cash):

• PM CARES Fund (Category 1): ₹20,000
• Approved Charitable Trust (Category 4): ₹30,000

Calculation:

• Donation to PM CARES Fund: ₹20,000 (100% deduction, No limit).
  • Deduction = ₹20,000
• Donation to Charitable Trust: ₹30,000 (50% deduction, Subject to 10% Adjusted Total Income limit).
  • Assume his other Chapter VI-A deductions (80C etc.) total ₹1,50,000.
  • GTI = ₹10,00,000. Other Chapter VI-A Deductions = ₹1,50,000. No special income.
  • Adjusted Total Income = ₹10,00,000 – ₹1,50,000 = ₹8,50,000.
  • 10% of Adjusted Total Income = ₹85,000.
  • Deduction for Charitable Trust (Category 4): Lower of (50% of ₹30,000 = ₹15,000) OR (10% of Adjusted Total Income = ₹85,000).
  • Deduction = ₹15,000

Total Deduction under Section 80G = ₹20,000 (PM CARES) + ₹15,000 (Charitable Trust) = ₹35,000.

Example 2: Cash Donation Limit

Ms. Priya (Individual) donates ₹3,000 in cash to an approved charitable trust (Category 4).

• Donation in Cash: ₹3,000. This exceeds the ₹2,000 cash limit.
• Deduction under Section 80G = ₹0. (Donation is not eligible because the cash amount exceeded ₹2,000).

If the donation was ₹2,000 in cash to the same trust:

• Donation in Cash: ₹2,000. This is within the ₹2,000 cash limit. Eligible.
• Assuming her Adjusted Total Income allows, deduction would be 50% of ₹2,000 = ₹1,000.

Example 3: Company Donation (Category 3)

ABC Pvt Ltd (a company) donates ₹1,00,000 (non-cash) to a local authority for family planning purposes (Category 3). The company’s GTI is ₹50,00,000. After all other deductions (except 80G), its income is ₹48,00,000 (This is its Adjusted Total Income).

• Donation: ₹1,00,000 (100% deduction, Subject to 10% Adjusted Total Income).
• Adjusted Total Income = ₹48,00,000.
• 10% of Adjusted Total Income = ₹4,80,000.
• Deduction for Donation (Category 3): Lower of (100% of ₹1,00,000 = ₹1,00,000) OR (10% of Adjusted Total Income = ₹4,80,000).
• Deduction = ₹1,00,000.

ABC Pvt Ltd’s Deduction under Section 80G = ₹1,00,000.

Important Points to Remember about Section 80G

Conclusion

Section 80G is a significant provision that allows any taxpayer to receive tax benefits for their charitable contributions. By categorizing eligible donations and applying varying deduction percentages and limits, it provides a structured approach to incentivizing giving.

Understanding the category of the donee, the cash payment limit, the importance of the donation receipt, and the calculation involving Adjusted Total Income (for some categories) is crucial. Importantly, this deduction is available under both the Old and New Tax Regimes from AY 2025-26 onwards, making it a widely applicable tax-saving option for charitable individuals and entities.

For accurate tax planning and computation, especially concerning the approval status of institutions and the calculation of Adjusted Total Income for applicable categories, consulting a qualified tax professional is strongly recommended.