Section 80G provides a tax deduction for donation to charitable organisations. These is no absolute limit on this deduction but there are limits depending on which type of organisation you are making the donation to. 80G provides 50-100% exemption on contributions to some government relief funds and 50% deduction up to 10% of income on some NGOs registered under the Income Tax Act. We will explain the different sub-limits below.
Section 80G provides deduction to individuals or firms/NGOs/partnerships/LLPs or companies. NRIs can also take the benefit of Section 80G.
Exemption Limits under Section 80G
- 100% deduction without any eligibility:
|Fund for welfare of Army/ Naval/ Air force|
|CM’s/ Lieutenant Governor’s Relief Fund regarding any State/Union Territory|
|National Illness Assistance Fund|
|National Trust for well-being of people having cerebral palsy, Autism, multiple disabilities and Mental Retardation|
|CM’s Earthquake Relief Fund, Maharashtra|
|Fund for development of technology and application|
|National Blood Transfusion Council|
|National Children’s Fund|
|Zila Saksharta Samiti|
|Fund formed for providing medical assistance to poor by state government|
|National Fund for Control of Drug Abuse|
|National Defense Fund formed by the central government|
|Andhra Pradesh CM’s Cyclone Relief Fund, 1996|
|National Sports Fund|
|Swachh Bharat Kosh|
|Approved university or educational institution of National importance like IIT, NIT etc.|
|National Cultural Fund|
|PM’s Armenia Earthquake Relief Fund|
|PM’s National Relief Fund|
|Clean Ganga Fund|
|Africa (Public Contributions – India) Fund|
|National Foundation for Communal Harmony|
|Fund formed by the Gujarat government with the purpose of providing relief only for the victims of Gujarat earthquake|
|The Maharashtra CM’s Relief Fund|
- 100% deduction subject to eligible limit
Contributions made to the below authorities are eligible for 100% deduction subject to 10% of adjusted gross total income:
- Contribution made by a company to IOA i.e. Indian Olympic Association or to other notified institution/association formed in India with the purpose of developing the infrastructure for sports or for sponsoring sports in India.
- Any approved authority/institution/association established with the objective of promoting family planning
- 50% deduction without any eligibility:
|Rajiv Gandhi Foundation|
|Jawaharlal Nehru Memorial Fund|
|PM’s Drought Relief Fund|
|Indira Gandhi Memorial Trust|
- 50% deduction up to 10% of adjusted gross income
Contributions made to the below authorities are eligible for 50% deduction subject to 10% of adjusted gross total income:
- Government/local authority established for charitable purpose except family planning
- For carrying out repairs and maintenance/renovation of notified mosque, temples, church, gurudwara or such places.
- Any corporation formed for encouraging the minority community and is referred in Section 10(26BB) of the Income Tax Act.
- Establishment or authority formed in India with the aim of providing affordable housing or for the purpose of improvement of cities/villages.
- Fund or Institution satisfying the conditions mentioned in Section 80G(5)
What is adjusted gross total income?
Gross total income is the income earned from all sources during a financial year by an assessee. This figure excludes long term capital gains, certain types of income earned by NRIs and other types of deductions under Sections 80CCC to 80U. The adjusted gross total income is arrived at by taking into account the following:
|Gross Total Income||XXX|
|Less: LTCG i.e. Long term Capital Gains||-XX|
|Less: Income earned under section 115A, 115D, 115AB/C/D which is regarding NRI and foreign companies.||-XX|
|Less: Amount deductible from sections 80CCC-80U (not including section 80G)||-XX|
|Less: Income Exempt from tax||-XX|
|Adjusted Gross Total Income||XXX|
Who can make a contribution as per section 80G?
Individuals, firms, LLPs, partnerships and companies can make contributions to welfare institutions for availing deduction under section 80G. NRIs can also get the benefit of this section.
Are contributions made in kind eligible for deduction u/s 80G?
No. Contributions made in kind are not eligible for deduction under section 80G of the Income Tax Act.
Can I make a contribution to foreign trust?
No. Contribution made to foreign trust is not eligible for deduction under section 80G.
Can I make a contribution to political parties under section 80G?
Though you can contribute to a political party, you cannot avail deduction under section 80G. A separate section 80GGB and section 80GGC have been introduced in the Income Tax Act for making donations towards political parties. Money donated towards political party which is registered under section 29A of the representation of people act or electoral trust can be claimed as deduction. In case an Indian company makes a contribution towards a political party, deduction can be claimed under section 80GGB. And if contribution is made by any other person (excluding local authority and every artificial juridical person wholly or partly funded by the government), deduction can be claimed under section 80GGC.
However, contribution should be done in cheque or demand draft or by internet banking. Donations made in cash are not eligible for deductions.
What if the contribution is deducted from the employee’s salary and the trust receipt is in the name of the employer?
Sometimes, contribution is made from the salary account of employee and the receipt is issued in the name of the employer. In such cases, the employee will have to get a certificate from the employer stating that the donation is made out of the salary account of employee. After obtaining this certificate, the employee can avail deduction for the donation made.
What should be the payment mode for availing this deduction?
Payment can be made in modes like cheque, demand draft or cash. If payment is made in cash, a maximum limit is imposed by the act.
What is the maximum amount which can be donated in cash?
Till the financial year 2016-17, a maximum limit of Rs.10,000/- on cash donations was imposed by the Income Tax Act. However, this has been changed and reduced from the financial year 2017-18 and also applies to 2018-19. The maximum limit of donation which can be made in cash is Rs.2000/-
Can I avail the entire money contributed towards section 80G?
There are restrictions on the eligible amount for deduction. If you contribute towards specified funds, you can avail 100% deduction on the money donated otherwise you can avail 50% of the money donated.
How donations are categorized u/s 80G?
Donations or contributions are broadly categorized into 4 types:
- 100% deduction without any eligibility
- 100% deduction subject to eligible limit
- 50% deduction without any eligibility
- 50% deduction subject to eligible limit
What are the documents required to claim deduction u/s 80G?
The assessee i.e. tax payer will have to provide the following documents for the purpose of availing deduction:
Receipt for donation
Issuing a receipt for the donations made is mandatory. The receipt should contain information about the trust and the contributor like the name and address of the trust, PAN number of the trust, name of the contributor, amount contributed by him in words as well as in figures.
If the contribution made is eligible for 100% deduction, the contributor should obtain Form 58 from the trust. Without this form, the assessee will not be eligible to get 100% deduction on the amount donated.
Registration number is being issued by the income tax department u/s 80G. This registration number should be mandatorily mentioned on the receipt of donations.
Validity of the trust registration number and a copy of 80G certificate
Generally, the registration number is issued for a period of 2 years and the trust has to renew the registration number after every two years. The registration should be in force at the time of making a donation to avail deduction u/s 80G. If the trust ceases to be valid, donations made cannot be availed as deduction.
Also, obtain a copy of 80G certificate with the receipt of donation made to the trust.
Can donation be made by an NRI?
Yes. NRIs can make donations and avail deduction u/s 80G of the Income Tax Act, provided the contributions are made to eligible institutions.
This section is available to all taxpayers other than those who have income from business and profession.
This deduction is available to
1.Any sum paid to a scientific research association or to a University, college or other institution to be used for scientific research. These institutions such have approval under Section 35(1)(ii) of the Income Tax Act, 1961.
2.Any sum paid to an institution undertaking rural development or training people involved in rural development, approved under section 35CCA/35CC