Section 80G: How to Claim Tax Benefit on Donations
- Asharam Swain
- 2 days ago
- 10 min read
Donations made to charitable organizations can significantly reduce your taxable income through deductions available under Section 80G of the Income Tax Act, 1961. This provision encourages voluntary giving while ensuring that taxpayers contributing to approved institutions receive financial relief in return. The section specifies which donations qualify, the extent of deduction allowed, and the procedure to claim it. With the right documentation and timely filing, individuals and businesses can maximize their tax savings while contributing to social welfare.
Table of Contents
What is Section 80G of the Income Tax Act?
Section 80G of the Income Tax Act, 1961, provides taxpayers with a deduction for donations made to specific charitable institutions, relief funds, or recognized organizations. The provision aims to promote social responsibility by encouraging individuals and businesses to contribute towards welfare and development causes. Donations under this section can be claimed as deductions from the gross total income while computing taxable income, reducing the overall tax burden. However, not every donation qualifies—only those made to government-approved institutions, registered charitable trusts, or funds with a valid 80G certificate issued by the Income Tax Department are eligible.
Eligibility Criteria for Claiming Deduction Under Section 80G
To qualify for the deduction under Section 80G, the donor must meet certain eligibility conditions. Any taxpayer, including individuals, Hindu Undivided Families (HUFs), companies, and firms, can claim this deduction provided they contribute to recognized funds or institutions. Donations must be made through identifiable payment modes such as cheque, demand draft, or electronic transfer. Cash donations above ₹2,000 are not eligible. The institution or trust must be registered under Section 80G and have a valid registration number or Unique Registration Number (URN). It is also essential that the donor retains proof of the donation in the form of a stamped receipt containing the donee’s name, address, PAN, and registration details.
Types of Donations Eligible for Deduction
The Income Tax Act categorizes donations into two main groups—those eligible for 100% deduction and those eligible for 50% deduction. Donations to certain national or government funds such as the Prime Minister’s National Relief Fund, National Defence Fund, or the Chief Minister’s Relief Fund qualify for a full 100% deduction. On the other hand, donations to charitable trusts, NGOs, or institutions working for social, educational, or medical causes are eligible for a 50% deduction. Additionally, some donations fall under a 10% qualifying limit, meaning deductions can be claimed up to 10% of the donor’s adjusted gross total income. Contributions beyond this threshold are not deductible.
How Much Deduction Can Be Claimed Under Section 80G?
The deduction under Section 80G depends on the category of the fund or institution. Donations to certain notified funds qualify for 100% deduction without any limit, while others qualify for 50% deduction with or without restriction. For donations with limits, only 10% of the adjusted gross total income can be claimed. Any amount exceeding this ceiling is not eligible. The adjusted gross total income is calculated after excluding deductions under Sections 80C to 80U and certain exempt incomes. Taxpayers should refer to the donation receipt and the nature of the organization to determine whether their contribution falls under the 100% or 50% category and whether it has an income threshold limit.
Mode of Payment and Documentation Requirements
To ensure eligibility under Section 80G, donations must be made through verifiable modes such as cheque, demand draft, UPI, credit card, debit card, or bank transfer. Cash donations above ₹2,000 are disallowed. Donors must collect and retain the donation receipt from the institution, which should clearly mention the donor’s name, donation amount, PAN of the trust, registration number under Section 80G, and date of issue. For online donations, digital payment confirmation and acknowledgment serve as valid proof. When filing income tax returns, these details help verify the claim under the appropriate deduction column. Proper documentation is crucial for avoiding scrutiny or disallowance during assessment.
Is Section 80G Deduction Allowed in the New Tax Regime?
Under the new tax regime introduced by Section 115BAC, most exemptions and deductions, including those under Section 80G, are not available. Taxpayers opting for the new regime cannot claim 80G benefits unless the government specifically notifies exceptions for particular funds. The new regime focuses on lower tax rates with minimal deductions, simplifying compliance but eliminating most traditional tax-saving provisions. However, taxpayers who wish to maximize their savings through donations and other deductions may still benefit more under the old tax regime, depending on their income composition and eligible exemptions.
How Section 80G Works in the Old Tax Regime
Taxpayers following the old regime can claim deductions under Section 80G to reduce their taxable income. For example, if an individual donates ₹50,000 to a trust that qualifies for a 50% deduction, ₹25,000 can be claimed as a deduction from their total income. For donations that fall under the 10% limit rule, if the taxpayer’s adjusted gross income is ₹10 lakh, only ₹1 lakh worth of donations will be considered for deduction, even if more is donated. Therefore, under the old regime, Section 80G provides substantial flexibility and opportunities for tax planning through charitable giving, especially when optimized with other deductions like 80C and 80D.
How to Claim Tax Benefit on Donations While Filing ITR
When filing the income tax return, taxpayers must report the details of their donations in the ‘Deductions’ section under Section 80G. This includes the name of the institution, PAN, and registration number. The amount donated and the applicable percentage of deduction (50% or 100%) should be accurately mentioned. It is advisable to maintain the receipt and acknowledgment for future verification. Platforms like TaxBuddy simplify this process by automatically categorizing eligible deductions, pre-validating donation details, and ensuring accurate filing. This reduces manual errors and ensures compliance with the latest CBDT guidelines while maximizing tax benefits.
Common Mistakes to Avoid When Claiming Section 80G
Common mistakes include donating to unregistered organizations, failing to collect proper receipts, or claiming deductions for cash donations exceeding ₹2,000. Another frequent error is misclassifying donations under the wrong percentage category (50% vs 100%) or exceeding the 10% of adjusted gross income limit for restricted categories. Taxpayers sometimes overlook mentioning the institution’s registration number, which may result in disallowance of the claim. Using verified tax-filing platforms helps minimize these errors by guiding users through the correct steps and ensuring all donation details align with the Income Tax Department’s database.
Real-life Example of Section 80G Deduction
Consider a taxpayer with an adjusted gross income of ₹12,00,000 who donates ₹60,000 to a government-approved charitable trust eligible for a 50% deduction subject to the 10% limit. Since the donation is within the 10% limit (₹1,20,000), the entire ₹60,000 qualifies. However, the deduction allowed will be 50% of ₹60,000, which is ₹30,000. Therefore, the taxable income becomes ₹11,70,000. If the same person donates ₹1,00,000 to the Prime Minister’s National Relief Fund (eligible for 100% deduction without limit), the entire amount can be deducted, reducing taxable income to ₹10,70,000.
Latest Updates and Notifications on Section 80G for FY 2024–25
The Union Budget 2025 and recent CBDT notifications have introduced measures to improve transparency in charitable donations. Institutions claiming 80G approval are now required to submit periodic statements verifying receipt details, enabling donors to cross-check transactions through their Annual Information Statement (AIS). Digital verification through the e-filing portal has been strengthened, making it easier to confirm whether a fund or trust is eligible. Additionally, the updated system encourages online donations over cash, ensuring better record-keeping and compliance. TaxBuddy’s platform has also integrated these updates, offering real-time verification of 80G-registered entities.
Why Use TaxBuddy for Claiming Section 80G Deductions
TaxBuddy simplifies the process of claiming deductions under Section 80G by integrating automated validation of donation receipts, fund registration numbers, and deduction categories. The platform’s AI-driven system cross-verifies entries to prevent disallowances, ensuring accurate and compliant filing. TaxBuddy also provides expert-assisted plans for individuals with multiple donations or complex returns, ensuring that each eligible deduction is properly utilized. With real-time tax optimization and seamless document upload features, TaxBuddy helps taxpayers file confidently while maximizing their 80G benefits.
Conclusion
Section 80G serves as a vital bridge between social responsibility and financial prudence, allowing taxpayers to contribute to meaningful causes while enjoying substantial tax relief. By understanding the eligibility, documentation, and claim process, donors can ensure their contributions are both impactful and compliant. 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 options to meet the needs of different taxpayers. The self-filing plan allows users to upload documents such as Form 16 or income statements, after which the platform’s AI engine automatically fills in relevant details, performs validation checks, and helps users file error-free returns. For those with complex cases involving multiple deductions, donations, or capital gains, the expert-assisted plan ensures a qualified tax professional reviews and files the return on their behalf. This dual model ensures convenience, accuracy, and peace of mind for every taxpayer.
Q2. Which is the best site to file ITR?
While the official Income Tax Department portal remains the statutory platform for filing income tax returns, platforms like TaxBuddy have become popular among taxpayers for their user-friendly experience and automation features. TaxBuddy’s system ensures real-time error detection, pre-filled data validation, and optimized deduction suggestions—including Section 80G claims. It helps both salaried individuals and business owners minimize errors and save time while staying fully compliant with tax laws. The combination of AI-based accuracy and expert review makes TaxBuddy one of the most reliable and efficient tax filing platforms in India.
Q3. Where to file an income tax return?
Taxpayers can file their income tax returns through two main options: the government’s e-filing portal or certified private platforms like TaxBuddy. On the government portal, users manually enter income details, deductions, and TDS information. However, on TaxBuddy, this process becomes significantly easier—users can simply upload key documents such as Form 16 or bank statements, and the AI engine auto-fills the return, ensuring that deductions like Section 80G are correctly applied. The platform also provides e-verification and instant acknowledgment to complete the filing process seamlessly.
Q4. How much deduction can be claimed under Section 80G?
The deduction under Section 80G depends on the type of organization or fund to which the donation is made. Certain funds such as the Prime Minister’s National Relief Fund qualify for a 100% deduction without any limit, while others allow 50% deduction with or without a 10% cap on adjusted gross total income. For instance, if a donation is made to a charitable trust eligible for 50% deduction under the 10% limit rule, only half the amount within the limit can be claimed. Hence, understanding the category of the recipient institution is essential to calculate the exact deduction.
Q5. Are donations made in cash eligible under Section 80G?
No, cash donations exceeding ₹2,000 do not qualify for deductions under Section 80G. To claim the deduction, the contribution must be made through traceable modes like cheque, bank transfer, credit or debit card, or UPI. This restriction ensures transparency and accountability in charitable giving. However, small cash donations below ₹2,000 are permitted. It is always advisable to retain proof of payment and acknowledgment receipts from the recipient institution to avoid disallowance during assessment or scrutiny.
Q6. Can businesses claim deduction under Section 80G?
Yes, businesses such as companies, firms, and LLPs can claim deductions under Section 80G for donations made to eligible funds and institutions. The same rules apply as for individuals—the donations must be made to registered entities, and payments above ₹2,000 must be through non-cash modes. Businesses often use this deduction to reduce taxable income while fulfilling their corporate social responsibility objectives. However, such donations must be separate from CSR contributions, as CSR-related payments are not eligible for deduction under Section 80G.
Q7. What documents are needed to claim a Section 80G deduction?
To claim a deduction under Section 80G, the donor must possess a valid donation receipt issued by the organization. The receipt should include the name and address of the institution, the donation amount, date of payment, PAN, and the registration number under Section 80G or the Unique Registration Number (URN). For digital donations, acknowledgment emails or online confirmations are acceptable. Donors are not required to attach these documents while filing their ITR but must keep them safely for verification if the Income Tax Department requests evidence during scrutiny.
Q8. Is 80G available in the new tax regime?
Under the new tax regime introduced by Section 115BAC, most exemptions and deductions—including Section 80G—are not available. Taxpayers who choose the new regime benefit from lower tax rates but forgo most deductions. As a result, charitable donations typically do not yield tax benefits under the new system unless the government specifically notifies exceptions for certain funds. Taxpayers who make frequent donations or rely on deductions for tax planning may find the old regime more beneficial. Evaluating both regimes carefully before filing is essential to maximize savings.
Q9. Can NRI taxpayers claim Section 80G deduction?
Yes, Non-Resident Indians (NRIs) can claim deductions under Section 80G, provided the donation is made to approved charitable institutions or funds registered in India. The contribution must be made from income earned in India and transferred through recognized banking channels. Donations to foreign charities or overseas institutions are not eligible. NRIs should ensure they collect proper receipts from the recipient institution, including registration details and PAN, as these documents are essential for claiming the deduction while filing Indian income tax returns.
Q10. What is the difference between 100% and 50% deduction under Section 80G?
The difference lies in the extent of tax benefit allowed for the donation. Certain funds like the Prime Minister’s National Relief Fund, National Defence Fund, and other specified national welfare funds qualify for a 100% deduction, allowing the donor to deduct the entire amount donated. Other recognized charitable institutions and trusts qualify for a 50% deduction, where only half the donated amount can be claimed. Additionally, some donations have no limit, while others are capped at 10% of the adjusted gross total income, creating a further distinction in eligibility.
Q11. How to verify if a charitable organization is registered under Section 80G?
To verify whether an organization is registered under Section 80G, taxpayers can visit the Income Tax Department’s e-filing portal and check the list of registered charitable institutions. By entering the institution’s PAN or Unique Registration Number (URN) in the “Tax Exempt Institution” section, donors can confirm its registration status, approval validity, and percentage of deduction allowed. This verification ensures that donations qualify for tax benefits and prevents fraudulent claims. TaxBuddy’s integrated system automatically validates this information, reducing manual errors for users claiming deductions.
Q12. How does TaxBuddy help in claiming Section 80G deductions accurately?
TaxBuddy’s AI-driven filing system simplifies the process of claiming deductions under Section 80G by automatically detecting eligible donations from uploaded documents and categorizing them correctly. It verifies the registration number of the donee institution, calculates the eligible deduction percentage, and ensures compliance with payment mode rules. Additionally, the platform alerts users if a donation exceeds permissible limits or lacks supporting documentation. For taxpayers with multiple donations or complex returns, TaxBuddy’s expert-assisted plans ensure every eligible deduction is claimed accurately, maximizing tax savings while maintaining complete transparency.
