Section 80G of the Income Tax Act offers tax deduction on contributions made to certain charitable institutions prescribed under the act.
Any taxpayer can claim this tax deduction for making donation towards an approved charitable institution.
You will need the following documents to avail deduction under section 80G of Income Tax Act, 1961.
Some donations qualify for either 50% or 100% tax deduction whereas some others qualify for the same deduction but up to a maximum limit of 10% of Adjusted Gross Total Income of the taxpayer. So, broadly they can be divided into 4 categories. It can be understood with the help of following illustration:
Donation made to some institutions is eligible for deduction without any upper limit while there are some others where the maximum amount of deduction is limited as per the prescribed provisions.
You can find Adjusted Gross Total Income by using the following formula:
|Gross Total Income||xxx|
|Less: Long Term Capital Gain||(xxx)|
|Less: Short Term Capital Gain on sale of shares u/s 111A||(xxx)|
|Less: Deductions u/s 80C to 80U (except u/s 80G)||(xxx)|
|Less: Exempt income||(xxx)|
|Less: Income referred to in Sections 115A, 115AB, 115AC, 115AD and 115D, relating to non-residents and foreign companies||(xxx)|
|Adjusted Gross Total Income||xxx|
|Less: Deduction u/s 80G||(xxx)|
|Total Taxable Income||xxx|
A donation falls in any of the 4 categories mentioned earlier depending upon the type of institution to which the amount is donated. The institutions are categorized below:
Can I claim donations made to political parties under this section?
Donations made to political parties can be claimed but not under this section. Section 80GGC offers tax deduction for donations made to political parties. To know more, click here.
Donation has been deducted from my salary account & certificate has been issued in the name of my employer. How can I claim tax benefit?
You can claim deduction under section 80G by obtaining a certificate from the employer specifying that donation was made was deducted from your salary account.
Can I claim deduction for donation made to entities in scientific research?
Yes but not under this section. Section 80GGA allows deduction for donation made for scientific research. To know more, click here.