How to Claim Tax Deductions on Donations Under Section 80G

Donations made to registered charitable institutions under Section 80G of the Income Tax Act, 1961, allow taxpayers to claim tax deductions and reduce their overall tax liability. These deductions apply to individuals, companies, HUFs, and NRIs, encouraging contributions to social and national causes. However, only donations made to approved and registered organizations qualify. To claim the benefit, donors must ensure proper documentation and payment through permissible modes. Understanding the process, eligibility, and deduction limits helps taxpayers claim the right benefit without errors during filing.

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Table of Contents

• Understanding Section 80G of the Income Tax Act

• Eligibility Criteria for Claiming Deductions Under Section 80G

• Types of Donations and Deduction Percentages

• How to Claim Tax Deduction Under Section 80G in ITR

• Documents Required to Claim 80G Deduction

• Limits on Donations Eligible for Tax Deduction

• Is Section 80G Deduction Allowed in the New Tax Regime?

• How Section 80G Works in the Old Tax Regime

• Recent Updates and Compliance Rules for FY 2024-25

• Common Mistakes to Avoid While Claiming Section 80G Deduction

• Role of Digital Payment Modes in Claiming 80G Benefits

• How TaxBuddy Helps Simplify the 80G Deduction Process

• Conclusion

• FAQS

Understanding Section 80G of the Income Tax Act

Section 80G of the Income Tax Act, 1961, was introduced to encourage philanthropy by providing tax deductions on donations made to specific charitable institutions and funds. It allows individuals, HUFs, companies, and NRIs to reduce their taxable income based on the amount donated. However, only contributions made to organizations registered under Section 80G are eligible. The Income Tax Department maintains a list of approved funds and institutions, ensuring transparency and compliance. The benefit helps taxpayers contribute to social welfare initiatives while also availing legitimate tax savings, provided proper documentation and payment modes are followed.

Eligibility Criteria for Claiming Deductions Under Section 80G

To qualify for deductions under Section 80G, donations must be made to registered and approved charitable institutions or funds. The organization should have a valid 80G registration certificate issued by the Income Tax Department. Donations made in cash are allowed up to ₹2,000, while amounts exceeding this limit must be paid through cheque, demand draft, or digital transfers such as UPI or net banking. The donor must retain a valid receipt that includes the institution’s name, address, PAN, registration number, and donation amount. In-kind contributions such as goods or services do not qualify for deductions under this section.

Types of Donations and Deduction Percentages

Donations under Section 80G are classified into categories based on the percentage of deduction allowed. Some donations qualify for 100% deduction without limit—for instance, contributions to the Prime Minister’s National Relief Fund or the National Defence Fund. Others qualify for 50% deduction without limit, such as donations to the Jawaharlal Nehru Memorial Fund or the Prime Minister’s Drought Relief Fund. Additionally, certain donations qualify for 100% or 50% deduction but are restricted to a maximum of 10% of the donor’s adjusted gross total income. Understanding these categories ensures that taxpayers claim the correct deduction during filing.

How to Claim Tax Deduction Under Section 80G in ITR

Claiming deductions under Section 80G during Income Tax Return (ITR) filing involves a few key steps. First, ensure that the donation was made to an eligible institution registered under Section 80G. Next, keep the donation receipt and verify all details mentioned, including the registration number and payment mode. While filing the ITR, navigate to the “Deductions” section and enter the donation details under Section 80G. Include the name of the organization, donation amount, and percentage of deduction (50% or 100%) as applicable. Retain all supporting documents, as the Income Tax Department may request verification during assessment or scrutiny.

Documents Required to Claim 80G Deduction

Proper documentation is essential for claiming 80G deductions. The donor must obtain a receipt from the charitable organization containing the donor’s name, address, amount donated, date of donation, PAN, and registration number under Section 80G. The receipt should be signed and stamped by the authorized person of the institution. Additionally, proof of payment through bank transfer, cheque, or UPI must be retained. For high-value donations, maintaining bank statements reflecting the transaction helps substantiate the claim. Without valid documentation, the Income Tax Department can reject the deduction claim during verification.

Limits on Donations Eligible for Tax Deduction

While Section 80G provides generous tax benefits, certain limits apply. The total deduction amount for donations qualifying under restricted categories cannot exceed 10% of the donor’s adjusted gross total income. Any excess amount is not eligible for deduction in subsequent years. Additionally, cash donations exceeding ₹2,000 are not allowed, emphasizing the importance of digital or cheque-based payments. These limits ensure accountability and transparency in charitable contributions while preventing misuse of deductions for non-genuine transactions. Understanding these thresholds is essential for accurate tax planning and filing.

Is Section 80G Deduction Allowed in the New Tax Regime?

Under the new tax regime introduced in Section 115BAC, most exemptions and deductions, including Section 80G, are not available. Taxpayers opting for the new regime cannot claim deductions for donations to charitable institutions, except for certain notified entities where specific exemptions apply. The new regime focuses on simplified tax computation with lower tax rates but minimal deductions. Therefore, individuals seeking to claim Section 80G benefits should evaluate whether the old tax regime provides greater overall savings before finalizing their filing choice.

How Section 80G Works in the Old Tax Regime

The old tax regime continues to allow deductions under Section 80G for eligible donations. Taxpayers who opt for this regime can claim either 50% or 100% of their donation amount, depending on the type of institution and applicable limits. The deduction helps reduce taxable income, resulting in direct tax savings. It remains an effective tool for individuals and businesses who make regular contributions to social or national causes. Before filing, it’s crucial to calculate the exact benefit and ensure that the total donation value aligns with the 10% income threshold wherever applicable.

Recent Updates and Compliance Rules for FY 2024-25

The government has recently strengthened the compliance framework for Section 80G. Charitable organizations must now renew their registrations periodically and maintain transparent financial disclosures. The Central Board of Direct Taxes (CBDT) has mandated that all donations be reported electronically by recipient institutions to ensure traceability. Anonymous donations exceeding ₹2,000 are disallowed for deduction. The validity period of 80G certificates has also been extended to reduce administrative delays. These measures ensure accountability in charitable donations and make the deduction process more reliable for genuine taxpayers.

Common Mistakes to Avoid While Claiming Section 80G Deduction

Many taxpayers lose out on deductions due to avoidable mistakes. Common errors include donating to non-registered organizations, failing to verify the 80G registration number, making donations in cash above ₹2,000, or not preserving receipts. Some taxpayers also claim deductions without including the organization’s details in their ITR, leading to disallowance. Another frequent oversight is exceeding the 10% income limit applicable to certain donations. Double-checking eligibility, documentation, and limits before filing can prevent rejections or notices from the tax department.

Role of Digital Payment Modes in Claiming 80G Benefits

Digital payments play an important role in simplifying compliance for Section 80G deductions. Transactions made through UPI, NEFT, RTGS, or internet banking create a verifiable audit trail, ensuring transparency and proof of contribution. The Income Tax Department encourages digital donations as they can be easily validated during assessments. Donors should avoid using cash for large contributions to ensure eligibility for deductions. Additionally, digital payments support faster confirmation of receipts from registered institutions, streamlining both donor records and reporting processes during ITR filing.

How TaxBuddy Helps Simplify the 80G Deduction Process

TaxBuddy’s AI-driven platform simplifies the process of claiming deductions under Section 80G by automatically identifying eligible donations and calculating the correct deduction amount. Users can upload their donation receipts, and the platform ensures accurate data entry while minimizing errors during filing. It also helps verify whether the charitable institution is registered under Section 80G and guides users through the documentation process. With both self-filing and expert-assisted plans available, TaxBuddy ensures that taxpayers claim every eligible deduction seamlessly and stay compliant with evolving tax regulations.

Conclusion

Section 80G serves as a meaningful bridge between social responsibility and tax planning. By contributing to approved charitable institutions, taxpayers can support humanitarian efforts while reducing their taxable income. Ensuring compliance with documentation, payment modes, and limits guarantees a smooth claiming process. Digital platforms like TaxBuddy make this even easier by guiding users step-by-step during filing. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.

FAQs

Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options? TaxBuddy provides both self-filing and expert-assisted plans, ensuring flexibility for every taxpayer. The self-filing plan is powered by an AI-based system that guides users through each step, automatically verifying data to reduce human error. TaxBuddy’s expert-assisted plan, on the other hand, connects users with certified tax professionals who review and file the return on their behalf. This option is particularly useful for individuals dealing with complex income sources, capital gains, or deductions like those under Section 80G. Whether one prefers a do-it-yourself approach or professional support, TaxBuddy ensures a smooth, compliant, and accurate filing experience.

Q2. Which is the best site to file ITR? While the Income Tax Department’s official e-filing portal is the authorized government platform for filing income tax returns, platforms like TaxBuddy have transformed the experience into a much simpler, faster, and more user-friendly process. TaxBuddy offers automation tools that detect common errors, optimize deductions, and ensure that each entry matches AIS and Form 26AS data. It also provides guided filing for deductions under Section 80G, Section 80C, and other relevant provisions. For taxpayers seeking both convenience and accuracy, TaxBuddy stands out as one of the best e-filing platforms in India.

Q3. Where to file an income tax return? Income tax returns can be filed through two main channels. The first is the official government portal (www.incometax.gov.in), where taxpayers manually enter their data and upload necessary documents. The second, more efficient option is to file through professional or AI-driven platforms like TaxBuddy. These platforms simplify the process by automating calculations, importing data directly from Form 16, and validating deductions such as those under Section 80G. Filing through TaxBuddy ensures compliance with the latest Income Tax Department guidelines while reducing the chances of mismatch or notice issuance.

Q4. Which donations qualify for 100% tax deduction under Section 80G? Not all donations qualify for full deduction under Section 80G. Certain funds and institutions are eligible for a 100% deduction without any upper limit. These include the Prime Minister’s National Relief Fund, the National Defence Fund, the Chief Minister’s Relief Fund, the National Children’s Fund, and funds established for promoting family planning. Donations to these specific entities are fully deductible from the taxable income, provided all conditions of payment and documentation are satisfied. Taxpayers must retain the receipt mentioning the 80G registration number to claim the 100% deduction accurately during ITR filing.

Q5. Can cash donations exceeding ₹2,000 be claimed under Section 80G? No, donations made in cash beyond ₹2,000 are not eligible for tax deductions under Section 80G. The government introduced this rule to encourage transparency and discourage unaccounted cash transactions. Donations exceeding ₹2,000 must be made through verifiable banking modes such as cheque, demand draft, UPI, NEFT, or RTGS. For instance, if a person donates ₹5,000 in cash to a registered NGO, only ₹2,000 will qualify for deduction. Digital payment records act as proof of transaction and must be preserved for audit or scrutiny.

Q6. How do I verify if an NGO or trust is eligible for Section 80G deduction? To ensure that a donation is eligible for tax deduction, it is essential to verify whether the NGO or trust is registered under Section 80G. Taxpayers can check this on the official Income Tax Department website using the organization’s PAN or registration number. The search result confirms the validity of the 80G certificate and its expiry date. Making donations only to verified entities protects the donor from future disallowances or notices. TaxBuddy also assists users in checking the eligibility of organizations during the filing process, ensuring only valid donations are claimed.

Q7. Are donations made in kind eligible for deduction under Section 80G? No, Section 80G strictly applies only to monetary donations. Contributions in kind—such as food, clothes, medicines, or other goods—are not eligible for tax deductions. The intent of the section is to promote financial contributions that can be transparently tracked and audited. Even if an NGO issues a receipt for in-kind donations, it cannot be claimed under Section 80G. Taxpayers should ensure that donations are made through money transfers or banking instruments to claim a valid deduction during ITR filing.

Q8. What documents are required to claim Section 80G deduction? Claiming a deduction under Section 80G requires the following documents:

• A donation receipt issued by the charitable institution, clearly mentioning the donor’s name, address, donation amount, and payment mode.
  

• The institution’s PAN, 80G registration number, and validity period on the receipt.
  

• Proof of payment—such as a bank statement, UPI confirmation, or cheque copy. These documents serve as evidence during tax filing and may be requested for verification during assessment. TaxBuddy helps users upload and organize these documents efficiently within its platform to ensure proper claim validation.
  

Q9. Can NRIs claim Section 80G deduction for donations made in India? Yes, NRIs (Non-Resident Indians) can claim Section 80G deductions for donations made to eligible Indian institutions and funds. However, the donation must be made from an Indian bank account or via an authorized banking channel such as NRE/NRO accounts. The organization receiving the donation must also be registered under Section 80G. It is important to retain payment proofs and receipts with complete details to substantiate the claim during ITR filing. TaxBuddy assists NRIs in evaluating eligible deductions and filing returns in compliance with both Indian and global tax reporting norms.

Q10. Is a PAN mandatory for claiming Section 80G deduction? Yes, mentioning the Permanent Account Number (PAN) of both the donor and the recipient organization is mandatory to claim deductions under Section 80G. The PAN ensures traceability and helps the Income Tax Department validate the authenticity of both parties involved in the transaction. If the donation receipt lacks the organization’s PAN or 80G registration number, the claim may be disallowed during assessment. Hence, taxpayers should always verify that the receipt is properly formatted and compliant before filing their return.

Q11. What happens if I donate to a non-registered organization? Donations made to organizations not registered under Section 80G are not eligible for any tax deduction, even if the purpose is charitable. The registration under Section 80G serves as a certification from the Income Tax Department confirming that the institution complies with regulatory and accounting standards. Taxpayers donating to unregistered entities will not receive deduction benefits, and such claims, if made, can lead to notices or disallowances. It’s advisable to verify the registration status before making any contribution or claiming deductions in the ITR.

Q12. Can I claim deductions for donations made via UPI or online banking? Yes, donations made through UPI, NEFT, RTGS, debit card, credit card, or net banking are fully eligible for deductions under Section 80G. These digital modes are preferred as they provide a clear transaction trail and enhance transparency. Donors must ensure that the payment is made directly to the organization’s account and that a valid receipt is issued mentioning the 80G registration details. Such payments are easier to verify and help avoid disputes during income tax assessments. Platforms like TaxBuddy also allow users to upload these receipts during filing for automatic deduction calculation.