Section 80G: Deduction for Donations to Charities
- PRITI SIRDESHMUKH
- Oct 6
- 8 min read
Section 80G of the Income Tax Act, 1961 allows donors to claim tax deductions for contributions made to approved charitable institutions and funds. This deduction reduces overall taxable income, encouraging philanthropy while offering tangible financial benefits. Only donations to organizations with valid 80G registration qualify, and taxpayers must follow strict compliance guidelines, including documentation and disclosure in their ITR. Understanding which donations qualify, how much can be claimed, and maintaining proper records is essential to maximize benefits under the old tax regime. TaxBuddy simplifies this process by guiding users through compliance and filing.
Table of Contents
Understanding Section 80G Deduction
Section 80G offers tax benefits for donations made to specified funds and charitable institutions approved by the Income Tax Department. The amount eligible for deduction can vary from 50% to 100% of the donated sum depending on the organization. Donations can include contributions to relief funds, charitable trusts, and government-approved NGOs.
Is Section 80G Allowed in the New Tax Regime?
In the new tax regime, most deductions and exemptions, including Section 80G, are not available. Taxpayers opting for the new regime cannot claim 80G deductions and will have to pay taxes without considering charitable contributions for tax reduction.
How Section 80G Works in the Old Tax Regime
Under the old tax regime, taxpayers can claim deductions for donations made to approved charitable organizations. The eligible deduction reduces taxable income, either at 50% or 100% of the donation, depending on the organization and whether a certificate of eligibility is issued. Contributions to NGOs registered under Section 80G also need to have valid donation receipts.
Eligibility Criteria for Donations Under Section 80G
To claim Section 80G, donors must ensure the organization receiving the donation is approved under the Income Tax Act. Eligible donations are typically monetary contributions; however, certain movable assets may qualify if explicitly mentioned by the Income Tax Department. Taxpayers must also ensure that the donations are voluntary and not made as consideration for any benefit or advantage.
Types of Donations and Deduction Limits
When it comes to claiming deductions for charitable contributions under Section 80G of the Income Tax Act, it is important to understand the different types of donations and the corresponding limits applicable to each. These distinctions determine how much of the donated amount can be deducted from your taxable income, which directly impacts your tax liability.
100% Deduction Without Qualifying Limit: Certain donations are given special status under the tax laws, allowing taxpayers to claim a full deduction for the entire contribution without any restriction. This category includes contributions made to the Prime Minister’s National Relief Fund, the PM CARES Fund, or other relief funds specifically notified by the government. Donations to these funds are intended to support national emergency situations, natural disasters, or other significant relief activities. Since these donations serve public and humanitarian purposes, taxpayers are eligible to claim a 100% deduction on the total amount donated, with no cap or percentage limit based on income.
50% Deduction With Qualifying Limit: Donations made to other approved charitable organizations or institutions that are registered under Section 80G typically qualify for a 50% deduction. However, this deduction is subject to a qualifying limit, meaning that the total eligible deduction cannot exceed 10% of the donor’s adjusted gross total income. For example, if an individual has an adjusted gross total income of ₹20 lakh and donates ₹3 lakh to an approved charitable organization, only ₹2 lakh (10% of income) would be allowed as a deduction, even though 50% of the donated amount would technically qualify. This rule ensures that donations remain proportionate to the taxpayer’s income while still encouraging philanthropy.
Ineligible Donations: Not all contributions are eligible for deductions under Section 80G. Donations made to private trusts, organizations, or institutions that do not have government approval under Section 80G do not qualify for any tax deduction. Taxpayers should carefully verify the approval status of the organization before claiming deductions to avoid rejections during income tax assessments. Contributions to purely personal or family-oriented trusts, or organizations established for private purposes, fall under this ineligible category.
Understanding these types of donations and the applicable limits is crucial for tax planning, as it helps taxpayers maximize eligible deductions while ensuring compliance with the Income Tax Act. Proper documentation, such as receipts issued by approved institutions, is also necessary to substantiate claims during tax filing and assessment.
How to Claim Section 80G Deduction in ITR
Taxpayers need to report eligible donations while filling out their Income Tax Return. In ITR forms, Section 80G has a designated section to input details of donations and claim deductions. Ensure the name, PAN, and donation amount match the approved certificates issued by the institution.
Documentation Required for Section 80G Deduction
Donation receipt issued by the organization, containing name, PAN, amount, and date of donation.
Certificate of eligibility issued by the Income Tax Department confirming the institution’s approval under Section 80G.
Bank statements or proof of transfer for donations made electronically.
Latest Compliance Rules and Updates
For the Financial Year 2024-25, taxpayers who make charitable donations need to be especially diligent in ensuring compliance with the latest rules under Section 80G of the Income Tax Act. Only donations made to organizations that are currently approved under Section 80G are eligible for tax benefits. This means that before making a contribution, donors must verify that the organization continues to hold valid approval for issuing donation receipts that qualify for deductions.
In addition, the mode of donation plays a critical role in eligibility. Donations made in cash exceeding ₹2,000 are no longer considered valid for tax deductions. Only contributions made through digital payment methods such as UPI, net banking, credit/debit cards, or cheque transfers are accepted. This requirement ensures transparency and allows the tax authorities to trace transactions effectively.
Receipts issued by the charitable institution must contain the organization’s Permanent Account Number (PAN) and other relevant details, as these are essential for claiming deductions during income tax filing. Tax authorities are increasingly scrutinizing donation claims, and incorrect or unverifiable donations may lead to disallowance during processing.
This framework emphasizes traceability, accuracy, and transparency, making it crucial for donors to maintain proper records and ensure that contributions comply fully with the prescribed norms for FY 2024-25.
Common Mistakes to Avoid When Claiming 80G
Claiming donations to unapproved organizations: Many taxpayers make the mistake of claiming deductions for donations given to organizations that are not approved under Section 80G of the Income Tax Act. Only donations made to registered charitable institutions with valid 80G certification are eligible for tax benefits. Donations to informal groups, unregistered NGOs, or private individuals do not qualify. Claiming such donations can lead to rejection of the deduction during assessment and may trigger notices from the Income Tax Department.
Failing to maintain donation receipts or certificates: Another common error is not retaining the proper documentation for the donations made. To claim an 80G deduction, it is mandatory to have receipts or certificates issued by the charitable organization. These documents must contain essential details such as the donor’s name, PAN, donation amount, and the organization’s registration number. Without proper records, taxpayers cannot substantiate their claim, and deductions may be disallowed during scrutiny.
Reporting cash donations above the prescribed limit: The Income Tax Act sets a limit for claiming deductions on cash donations, which is currently ₹2,000 per donation. Donations exceeding this amount must be made through cheque, draft, or online transfer to be eligible for deduction. Claiming cash donations above the prescribed limit is a frequent mistake that can result in disallowance of the excess amount.
Mismatched details between ITR and donation receipts: Taxpayers sometimes report donation amounts incorrectly or fail to match the details mentioned in the receipts, such as the organization’s name, donation date, or PAN. Any discrepancies between the ITR and the supporting documentation can lead to the rejection of the deduction and may require clarification during assessment.
Ignoring PAN verification of the charitable organization: Every eligible donation under Section 80G must be made to an organization that has a valid PAN and is recognized by the Income Tax Department. Taxpayers often overlook verifying the PAN of the charitable institution, which can cause issues in processing the deduction. Ensuring that the organization’s PAN is correct and matches the details in the ITR is crucial for seamless claim approval.
TaxBuddy Assistance for Section 80G Filing
Platforms like TaxBuddy streamline the process of claiming 80G deductions by providing step-by-step guidance while filing ITR. TaxBuddy ensures that only eligible donations are reported, verifies the required documentation, and helps avoid common errors that could delay processing. This ensures a smooth, error-free filing experience, whether using the self-filing plan or expert-assisted options.
Conclusion
Section 80G offers a valuable opportunity for taxpayers to reduce their tax liability while contributing to social causes. Accurate reporting, proper documentation, and adherence to eligibility criteria are essential for claiming these deductions. For anyone looking for assistance in claiming Section 80G and filing ITR, it is highly recommended to download the TaxBuddy mobile appfor a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for claiming Section 80G?
Yes. TaxBuddy provides flexible options for taxpayers. You can either file your ITR using the self-filing plan, where the platform guides you step by step, or choose the expert-assisted plan, where a tax professional ensures that all eligible Section 80G deductions, including donation claims, are accurately reported. Both plans help maximize deductions and reduce the chances of errors.
Q2. Can donations made in cash above ₹2,000 be claimed under Section 80G?
No. Donations made in cash exceeding ₹2,000 are not eligible for deduction under Section 80G. To claim a deduction, contributions must be made through digital payments, cheque, draft, or other traceable methods, ensuring transparency and compliance with the Income Tax Act.
Q3. What types of organizations qualify for 100% deduction under Section 80G?
Organizations approved under Section 80G for 100% deduction generally include central and state government funds, certain charitable trusts, and institutions promoting social welfare or education. Donations to these institutions allow taxpayers to claim a full deduction of the donated amount.
Q4. How do I report Section 80G donations in my ITR?
Section 80G donations should be reported in the “Deductions under Chapter VI-A” section of your ITR form. TaxBuddy automatically provides fields for entering donation details, including the amount, organization name, and receipt number, ensuring accurate reporting.
Q5. Is Section 80G deduction available in the new tax regime?
No. The new tax regime does not allow most deductions under Chapter VI-A, including Section 80G. Only taxpayers opting for the old tax regime can claim these deductions. TaxBuddy helps compare regimes to identify whether claiming 80G is beneficial.
Q6. Can I claim 50% deduction for donations exceeding 10% of my gross total income?
Yes. Certain donations approved under Section 80G allow a 50% deduction, provided the donation does not exceed 10% of the gross total income. Proper documentation and receipts are mandatory to claim this benefit.
Q7. Are recurring monthly donations eligible for 80G deduction?
Yes. Recurring donations, such as monthly contributions to eligible charitable institutions, are allowed under Section 80G. Each installment must be supported with valid receipts, and the cumulative amount can be claimed in your ITR.
Q8. What documents are mandatory to claim Section 80G deduction?
To claim the deduction, taxpayers must maintain:
A valid donation receipt with the organization’s name, PAN, and registration number
Date and amount of donation
Proof of payment (cheque, bank transfer, or online payment slip)
TaxBuddy allows uploading these documents to ensure error-free filing.
Q9. Does TaxBuddy verify the eligibility of the charitable institution?
Yes. TaxBuddy automatically cross-checks whether the charitable institution is registered under Section 80G. It flags non-eligible organizations, reducing the risk of rejected claims or scrutiny from the Income Tax Department.
Q10. Can I claim deduction if the donation receipt does not have the PAN of the organization?
No. For donations exceeding ₹10,000, the receipt must include the PAN of the charitable organization. Missing PAN details can lead to rejection of the deduction claim during ITR processing. TaxBuddy highlights such discrepancies before filing.
Q11. Are donations to foreign charities eligible under Section 80G?
No. Section 80G deductions are allowed only for donations made to institutions registered in India and approved under the Income Tax Act. Donations to foreign charities are not eligible, even if receipts are provided.
Q12. How long should I retain donation receipts for tax purposes?
Taxpayers should retain donation receipts for a minimum of six years from the end of the relevant financial year. This is important in case of scrutiny, audits, or verification by the Income Tax Department. TaxBuddy provides a secure way to store digital copies for future reference.
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