Understanding Section 80G: Tax Deductions for Donations towards social causes
Have you ever donated funds for charity or social purposes? Or, have you made contributions towards any National Relief Fund? If your answer is yes, then you could utilize these donations to gain Income Tax benefits. The Income Tax Act, 1961 encourages charitable deeds and thus under Section 80G, it offers donation tax benefits to the donors.
Section 80G of the Income Tax Act
Section 80G offers tax deductions for donations made to certain charitable funds and institutions. Below we have provided details of this section:
Under Section 80-G of Income Tax Act, you are eligible for income tax deductions only for the amount which has been donated. Deductions can be claimed while filing the ITR (Income Tax Return). Donation deduction in income tax can be claimed by any tax payer irrespective of their source of income. This section is applicable to all assesses – whether a resident Indian or an NRI, HUF or a company – who make eligible donations.
The tax deduction limit under Section 80G of ITA is either 50% or 100%. It entirely depends on the charitable institution to which the amount is donated.
Charitable organizations with 100% deduction without any qualifying limit:
Prime Minister’s National Relief Fund
National Defence Fund
Prime Minister’s Armenia Earthquake Relief Fund
The Africa (Public Contribution – India) Fund
The National Foundation for Communal Harmony
Approved university or educational institution of national eminence
The Chief Minister’s Earthquake Relief Fund, Maharashtra
Donations made to Zila Saksharta Samitis.
The National Blood Transfusion Council or a State Blood Transfusion Council.
The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air Force Central Welfare Fund.
Army Central Welfare Fund, Indian Naval Ben. Fund, Air Force Central Welfare Fund.
National Illness Assistance Fund
Chief Minister’s or Lt. Governor’s Relief Fund
National Sports Fund
National Cultural Fund
Govt. / local authority/ institution/ association towards promoting family planning
Central Govt.’s Fund for Technology Development & Application
National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation & Multiple Disabilities
Indian Olympic Association/ other such notified association
Andhra Pradesh Chief Minister’s Cyclone Relied Fund
Charitable organizations with 50% deduction without any qualifying limit
Jawaharlal Nehru Memorial Fund
Prime Minister’s Drought Relief Fund
National Children’s Fund
Indira Gandhi Memorial Trust
The Rajiv Gandhi Foundation
Donations to govt./ local authority for charitable purposes (excluding family planning)
Authority/ corporation having income exempt under erstwhile section or u/s 10(26BB)
Donations for repair/ renovation of notified places of worship
World Vision India
For certain donations, the aggregate deduction limits to 10 per cent of the ‘Adjusted Gross Total Income’. Thus, in such cases, even if you are donating funds eligible for deduction, it would be capped at 10 per cent of the Adjusted Gross Total Income – Gross total income minus long-term capital gain along with short term capital gain and all deduction under Section 80CCC to 80U except any deduction in this section.
Donations to the following are subjected to 10% of Adjusted Gross Total Income:
For 100% Deduction
Govt. or local authority for promoting family health planning
Sums paid to Indian Olympic Association
For 50% Deduction
Govt. or local authority for any charitable purposes other than family health planning.
Sub-sections of Section 80G, ITA
One should not end up claiming tax deductions referring just to Section 80G. There are some sub-sections as well:
Section 80GGA – 100% tax deduction is application for any donation made to entities in scientific research and rural development under this section.
Section 80GGC – This section allows for 100% tax deduction for donations made towards a political party registered under Section 29A, Representation of the People Act, 1951or an electoral trust.
Documents required for claiming Tax deductions
Proper documentation is a must for gaining tax advantages with charity. Here’s a list of documents needed to claim deductions in Income Tax.
Stamped Receipt -A receipt with the name, address and PAN of the trust, the name of the donor and the amount donated is mandatory for claiming the donation rebate in income tax. In case of eligibility for 100% deduction Form-58 should also be attached.
Registration Number of the Trust –The receipt should also have the valid registration number of the trust with the dates of validity mentioned.
Photocopy of 80-G Certificate – Also ensure to attach the photocopy of 80-G certificate in addition to receipt.