Tax Deductions Under Section 80G of Income Tax Act

Doing charity is a noble task. Not just the God but the tax department acknowledges this fact. Therefore, you get more than just good karma for donating your income to charitable institutions. Section 80G of the Income Tax Act offers a tax deduction on contributions made to certain charitable institutions prescribed under the Income Tax Act, 1961.

Eligibility

Any taxpayer can claim this tax deduction for making donation towards an approved charitable institution.

Mode of donation under section 80G

• Only donations made in the form of cash or cheque are eligible for tax deduction. However, donations made in cash do not qualify for a tax deduction exceeding Rs. 10,000. Donations made in kind do not qualify for any tax deduction.
• Starting Financial Year 2017-18 any donations made in cash exceeding Rs 2000 will not be allowed as deduction. Therefore the donations exceeding Rs 2000 should be made in any mode other than cash to qualify as deduction u/s 80G.

Documents Required for Claiming Deduction under Section 80G

You will need the following documents to avail deduction under section 80G of Income Tax Act, 1961.

Stamped receipt:

• You must obtain a stamped receipt from the trust or institution where you make a donation.
• It acts as a valid proof of donation.
• Such receipt should have the name, address and PAN of the trust or institution mentioned on it.
• Receipt should also include the name of the donor and details of amount donated mentioned on it.
• Registration number of the trust under section 80G and validity of registration (registration period) must be mentioned on the receipt.

Form 58:

• If your donation is eligible for 100% tax deduction then you also require a Form 58 from the trust or institution.
• Details like cost of project, amount authorised for project & actual amount collected by the institute is mentioned in Form 58.
• Without Form 58, your claim for 100% tax deduction can be rejected even if you have stamped receipt.

Photocopy of the 80G certificate:

• This document is not mandatory to claim tax deduction.
• However, you can ask for a photocopy of this certificate to ensure that it is still valid.

Maximum Deduction limit under section 80G

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.

Category 1: Where deduction is available without any upper limit

1. Institutions where 100% donation is eligible for deduction
2. Institutions where 50% donation is eligible for deduction

Category 2: Where deduction is subject to maximum limit of 10% of Adjusted Gross Total Income

1. Institutions where 100% donation is eligible for deduction
2. Institutions where 50% donation is eligible for deduction

What is Adjusted Gross Total Income?

You can find Adjusted Gross Total Income by using the following formula:

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:

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Prescribed funds & institutions under Section 80G

• Donations which qualify for 100% deduction without any upper limit:
  1. National Illness Assistance Fund
  2. National Blood Transfusion Council or to any State Blood Transfusion Council
  3. National Defence Fund set up by the Central Government
  4. Prime Minister’s National Relief Fund
  5. National Foundation for Communal Harmony
  6. Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
  7. Fund set up by a State Government for the medical relief to the poor
  8. National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
  9. An approved university/educational institution of National eminence
  10. National Sports Fund
  11. National Cultural Fund
  12. Fund for Technology Development and Application
  13. National Children’s Fund
  14. Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
  15. The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
  16. The Maharashtra Chief Minister’s Relief Fund during October 1, 1993 and October 6, 1993
  17. Chief Minister’s Earthquake Relief Fund, Maharashtra
  18. Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat
  19. Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of earthquake in Gujarat (contribution made during January 26, 2001 and September 30, 2001) or
  20. Prime Minister’s Armenia Earthquake Relief Fund
  21. Africa (Public Contributions – India) Fund
  22. Swachh Bharat Kosh (applicable from FY 2014-15)
  23. Clean Ganga Fund (applicable from FY 2014-15)
  24. National Fund for Control of Drug Abuse (applicable from FY 2015-16)

• Donations which qualify for 50% deduction without any upper limit
  1. Jawaharlal Nehru Memorial Fund
  2. Prime Minister’s Drought Relief Fund
  3. Indira Gandhi Memorial Trust
  4. Rajiv Gandhi Foundation

• Donations which qualify for 100% deduction subject to 10% of adjusted gross total income:
  1. Government or any approved local authority, institution or association to be utilised for the purpose of promoting family planning.
  2. Donation by a Company to the 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.

• Donations to the following institutions are eligible for 50% deduction subject to 10% of adjusted gross total income:
  1. Any other fund or any institution which satisfies conditions mentioned in Section 80G(5)
  2. Government or any local authority to be utilised for any charitable purpose other than the purpose of promoting family planning
  3. Any authority constituted in India 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
  4. Any corporation referred in Section 10(26BB) for promoting interest of minority community
  5. For repairs or renovation of any notified temple, mosque, gurudwara, church or other place

People also ask

Q. Can I claim donations made to political parties under this section?

A. Donations made to political parties can be claimed but not under this section. Section 80GGC offers tax deduction for donations made to political parties.

Q. Donation has been deducted from my salary account & certificate has been issued in the name of my employer. How can I claim tax benefit?

A. 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.

Q. Can I claim deduction for donation made to entities in scientific research?

A. Yes, but not under this section. Section 80GGA allows deduction for donation made for scientific research.