- Under section 80G, tax exemption is allowed on the amount donated to select institutions
- The contribution should have been made by cheque or draft, any donation in cash above Rs 2000 is not permitted for tax exemption
- The donor must collect the receipt from the trust where donation is being made and quote the registration number of trust while filing tax
- The donor should verify the registration number of trust is valid on the day donation is being made
- The various donations specified in section 80G are eligible for deduction up to either 100% or 50% with or without restriction as provided in Section 80G.
With the intent to encourage and provide taxpayers with an avenue to claim tax relief on donations by them, the government has created Section 80G to claim deductions on such contributions. Under Section 80G benefits, the amount that has been donated by a person is allowed to be claimed, at the time of filing his income tax return subject to conditions specified under the section. This deduction can only be claimed when the contribution has been made via cheque or draft or in cash.
Who can claim the deduction?
This deduction for donation can be claimed by any taxpayer; individual, partnership firm, HUF, company and LLP, irrespective of whether they are earning income from salary or business. The deduction available under Section 80G is over and above the deduction of Rs 1.5 lakh that one can avail under Section 80C of the Income Tax Act. However, all donations are not eligible for deduction under section 80G — only donations made to prescribed funds qualify as a deduction. Likewise, contributions like food material, clothes and medicines or anything else that is in kind does not qualify for deduction under section 80G.
How much can be claimed?
First, from financial year 2017–18, any donation made in cash exceeding Rs 2,000 will not be allowed as deduction. So, donations above Rs 2,000 should be made only by cheque or any other form of bank transfer to qualify as deduction under section 80G. The various donations specified in section 80G are eligible for deduction up to either 100% or 50% with or without restriction as provided in Section 80G.
How to claim the deduction?
To claim deduction under Section 80G, the taxpayer needs to furnish the following along with their Income Tax Returns: name of the donee, PAN of the donee, address of the donee and the amount contributed.
Documents Required to Claim Deduction under Section 80G
1.Duly Stamped Receipt: It is mandatory to have a receipt issued by the trust/charity which receives a donation. This receipt should include details like the name, address and PAN number of the trust, amount donated and the name of donor.
2.Form 58: Form 58 is essential if a donor intends to claim 100% deduction on a donation, without which their donation will not be eligible for 100% deduction.
3.Registration Number of Trust: Each eligible trust is provided with a registration number by the Income Tax Department and donors should ensure their receipt contains this number. This registration number needs to be valid on the date of a particular donation, failing which a donation might be ineligible for deductions.
Prescribed funds and institutions under Section 80G
Donations with 100% deduction without any qualifying limit
- National Defence Fund set up by the Central Government
- Prime Minister’s National Relief Fund
- National Foundation for Communal Harmony
- An approved university/educational institution of National eminence
- Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
- Fund set up by a State Government for the medical relief to the poor
- National Illness Assistance Fund
- National Blood Transfusion Council or to any State Blood Transfusion Council
- National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
- National Sports Fund
- National Cultural Fund
- Fund for Technology Development and Application
- National Children’s Fund
- Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
- 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
- Chief Minister’s Earthquake Relief Fund, Maharashtra
- Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat
- Africa (Public Contributions — India) Fund
- Swachh Bharat Kosh (applicable from 2014–15)
- Clean Ganga Fund (applicable from 2014–15)
- National Fund for Control of Drug Abuse (applicable from 2015–16)
Donations with 50% deduction without any qualifying limit:
- Jawaharlal Nehru Memorial Fund
- Prime Minister’s Drought Relief Fund
- Indira Gandhi Memorial Trust
- Rajiv Gandhi Foundation
Prescribed funds and institutions under Section 80G
Donations to the following are eligible for 100% deduction subject to 10% of adjusted gross total income:
- Government or any approved local authority, institution or association to be utilised for the purpose of promoting family planning
- 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 are eligible for 50% deduction subject to 10% of adjusted gross total income:
- Any other fund or any institution which satisfies conditions mentioned in Section 80G(5)
- Government or any local authority to be utilised for any charitable purpose other than the purpose of promoting family planning
- 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
- Any corporation referred in Section 10(26BB) for promoting interest of minority community
- For repairs or renovation of any notified temple, mosque, gurudwara, church or other place.
- Adjusted total income: Adjusted gross total income is the gross total income (sum of income under all heads) less the following:
- Amount deductible under Sections 80CCC to 80U (but not Section 80G)
- Exempt income
- Long-term capital gains
- Income referred to in Sections 115A, 115AB, 115AC, 115AD and 115D, relating to non-residents and foreign companies