Section 80G of Income Tax Act: Deduction and Exemption

Section 80G of Income Tax Act allows tax deductions for charitable donations. This blog covers recent Budget 2025 updates, deduction limits, eligible organizations, and required documentation. Understanding these rules helps taxpayers optimize tax savings while contributing to recognized charitable causes.

A tax deduction for donations made to certain charitable organisations is availed under Section 80G of Income Tax Act. The deduction varies depending on which organisation one donates to and the mode of payment chosen. The recent changes brought on by Budget 2025 include much stricter conditions-on mandatory digital payments-cuts. Thus, it is important to know about eligibility, limits, and required documents before availing of tax benefits.

Section 80G Tax Exemption

Section 80G Tax Exemption allows tax benefits for donations made to charitable organisations under the Indian Income Tax Act. Donations qualifying for this provision allow deductions to donors thereby reducing taxable income with such deductions resulting in plausible tax savings. It aids recognised institutions and, concurrently, gives considerable tax benefits to donors. However, set limits and conditions apply, whereby exemption will be determined by the classification of the recipient organisation and the mode of donation.

Amount of Deduction Under Section 80G Income Tax

Donations to eligible trusts and charities that qualify for tax deductions are subject to specific conditions under Section 80G of Income Tax Act. These donations are classified into four main categories:

Donations With 100% Deduction (Available Without Any Qualifying Limit)

Certain contributions are eligible for a full tax deduction without any limit. This includes donations to:

• National Defence Fund
• Prime Minister’s National Relief Fund
• Prime Minister’s Armenia Earthquake Relief Fund
• Africa (Public Contributions – India) Fund
• National Children’s Fund
• National Foundation for Communal Harmony
• Recognised universities or educational institutions of national significance
• Chief Minister’s Earthquake Relief Fund, Maharashtra
• Gujarat State Government Fund for earthquake relief
• Zila Saksharta Samiti for literacy programs
• National and State Blood Transfusion Councils
• State Government medical relief funds for the underprivileged
• Army, Navy, and Air Force welfare funds
• Andhra Pradesh Chief Minister’s Cyclone Relief Fund (1996)
• National Illness Assistance Fund
• Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund
• National Sports Fund
• National Cultural Fund

Donations With a 50% Deduction (Available Without Any Qualifying Limit)

Contributions to certain funds and organisations qualify for a 50% tax deduction without any restriction on the amount. These include:

• Jawaharlal Nehru Memorial Fund
• Prime Minister’s Drought Relief Fund
• Indira Gandhi Memorial Trust
• Rajiv Gandhi Foundation

Donations With 100% Deduction (Available up to 10% of Adjusted Gross Total Income)

Donations made for the purpose of family-planning programs to government or other local authorities as well as donations made to the Indian Olympic Association qualify for one hundred percent deduction but still are limited to 10 percent of the adjusted gross total income of the donor. Any amount above that will not qualify for any deductions. 

Donations With a 50% Deduction (Available up to 10% of Adjusted Gross Total Income)

Some donations qualify for a 50% deduction but are limited to 10% of the donor’s adjusted gross total income. These include donations to

• Charitable institutions approved by the Commissioner of Income Tax and set up as public charitable trusts, societies, or registered companies under Section 8 of the Companies Act
• Universities and educational institutions recognised by the government or affiliated with a university
• The government and local authorities for charitable purposes, not including family planning
• Authorities for urban planning, housing, and infrastructure development
• Corporations engaged in working on behalf of minority communities
• The renovation or repair of temples, mosques, gurdwaras, churches, or other recognised places of worship for their historical, archaeological, or artistic value, as per government recognition.

Adjusted Gross Total Income

Adjusted gross total income means the total income calculated before granting any deductions under the provisions of Chapter VI-A of the Income Tax Act. It is arrived at by deducting the following from the gross total income: 

• Deductions available under Sections 80CCC to 80U excluding Section 80G.
• Income exempt under Section 10 of the Act.
• Long-term capital gains.
• Short-term capital gains that are taxed under Section 111A at 15%.
• Income covered under Sections 115A, 115AB, 115AC, and 115AD as regards non-residents and foreign companies.

Documents Required for Claiming a Deduction

To seek a deduction under Section 80G, the taxpayers must possess the requisite papers to substantiate the claims. 

Donation Receipt

A receipt must be obtained from the Trust or Charity to be eligible for deduction under Section 80G. The following information must be provided: 

• Name and address of the Trust/NGO. 
• Donor’s name. 
• Donated amount (in words and figures). 
• Trust registration number under Section 80G and its validity period according to the Income Tax Department.

Form 58A

When there are donations that merit 100% deduction, Form 58A must be given here. If Form 58A is not given, the donation shall be disqualified for full deduction. Form 58A is issued only for very specific types of eligible donations.

Types of Donations Eligible for the Deduction Under Section 80G

Section 80G of the Income Tax Act provides deductions for donations made to certain charitable organizations. The eligibility for claiming a deduction under this section depends on the nature of the charity and the type of donation made.

Here are the types of donations eligible for a deduction under Section 80G:

1. Donations to Approved Charitable Institutions

• Relief Funds: Donations to various relief funds like the Prime Minister’s National Relief Fund (PMNRF), the Chief Minister’s Relief Fund, or the National Defence Fund are eligible for deductions under this section.
  
• Registered Charitable Organizations: Donations made to charitable organizations that are registered under Section 12A or 12AA of the Income Tax Act or are approved by the NITI Aayog are eligible for deductions.

2. Donations to Political Parties

Donations made to registered political parties and electoral trusts are eligible for a deduction under Section 80GGC for individuals and companies. The donation must be made through a cheque, draft, or any other banking channel.

3. Donations to Relief and Welfare Funds

Donations to specific welfare and relief funds, including those for:

• National or State Disaster Relief Funds.
• Funds for promoting scientific research or rural development.
• Rural development organizations that are registered with the government.

4. Donations to Universities and Educational Institutions

• Donations to universities, colleges, and educational institutions that are approved by the government or are engaged in research activities may qualify for deduction under Section 80G.
• Donations for scientific research or projects related to social or economic welfare also qualify.

5. Donations to Registered Trusts and NGOs

• Donations made to trusts and non-governmental organizations (NGOs) that are recognized under Section 80G.
• These organizations must meet specific conditions, such as:

1. Being registered under Section 12A or 12AA.
2. Having approval from the Income Tax Department under Section 80G itself.
   

6. Types of Donations Eligible for Deduction

Donations under Section 80G are classified into two categories based on the percentage of the donation that is deductible:

• 100% Deduction (with no restriction): Donations made to certain relief funds and government-approved organizations such as:

1. PMNRF (Prime Minister’s National Relief Fund).
2. National Defence Fund.
3. Chief Minister’s Relief Fund.
4. National Foundation for Communal Harmony.
5. Fund for Technology Development and Application.
6. Zoological Society of India.

• 50% Deduction (With Restriction): Donations made to other organizations, including educational institutions, medical relief organizations, and NGOs that do not fall under the 100% category.However, the deduction may be restricted to 50% of the donation amount, subject to specific limits. Some organizations offer partial deductions, and the exact percentage can vary based on the organization’s approval status.

7. Cash Donations

Cash Donations: As of the Finance Act 2020, donations made in cash that exceed ₹2,000 are not eligible for a deduction. Any cash donation below ₹2,000 will still be eligible for a deduction, but donations over ₹2,000 must be made through a cheque, draft, or electronic transfer.

8. Donations to Charitable Institutions with Specific Goals

Donations made to institutions or organizations that work towards specific charitable goals, like:

• Public Charitable Trusts for promoting education, social welfare, and religion.
• Organizations that promote cultural activities.
• Organisations working towards the preservation of the environment and wildlife.
  

9. Donations to International Charitable Organizations

Donations made to certain international charitable organizations can also be eligible for deductions if the organization is approved by the Income Tax Department under Section 80G.

Important Conditions for Claiming Deduction Under Section 80G:

• The donation must be made to an organization or fund that has been approved under Section 80G.
• The taxpayer must obtain a receipt from the charitable organization that specifies the name of the donor, amount donated, and details of the organization’s approval under Section 80G.
• The deduction can be claimed only in the assessment year in which the donation was made.

How to Claim the Deduction Under Section 80G While Filing ITR?

The taxable income is determined with reference to the net taxable income of the taxpayer, which is the income after allowable deductions are subtracted from gross total income. The deductions under Section 80G are considered from gross total income, which includes the income from salary, dividend, capital gains, interest, and rental income. 

Claiming Deductions Under Section 80G

Deductions under Section 80G for donations are either 50% or 100% of the donated sum. Donations benefitting particular charities could be entitled to a full deduction right away, or with a qualifying limit. 

To apply for these deductions, the taxpayers must declare their donations in their Income Tax Return under ‘Schedule 80G’. This schedule has tables A to D for different categories of charitable institutions. 

A  newly added column to table D calls for the disclosure of the ARN by the taxpayers for cases where the deductions are allowed at 50% subject to the qualifying limit.

In total, taxpayers submitting ITR Forms 2 and 3 are required to separately mention the total deduction under Section 80G.

Particulars to Claim Section 80G Deduction

For claiming the deduction, the following particulars must be mentioned in the Income Tax Return:

• Name of the Donee
• PAN of the Donee
• Address of the Donee
• Cash and non-cash contribution break-up amount donated
• Amount of the eligible deduction

How to Calculate the Deduction Amount Under Section 80G

Division of donations into two flavors under Section 80G:

• Donations without a qualifying limit
• Donations with a qualifying limit.

These are further subdivided into different subcategories according to the degree of qualifying limits- maximum eligible amounts for deduction.

Steps of Deduction Under Section 80G

1. Section 80G Categorize the recipient fund or charitable institution-whether it qualifies for a 100% or 50% deduction with or without the qualifying limit. Refer to the complete listing of eligible institutions provided below.
2. For donations in the first category (without a qualifying limit), no more calculations as just claim 100% or 50% of the donated amount subject to taxable income.
3. For donations in the second category (with a qualifying limit), the maximum possible deduction is reliant on 10% of the adjusted gross total income (AGTI). 

• Apply the following formula to compute the deduction:
• Gross Qualifying Limit = Total donations made under Category
• Net Qualifying Limit = 10% of the AGTI; 
• Deductible amount = 100% or 50% of the donation, subject to net qualifying limit.

Mode of Payment Under Section 80G

In India, taxpayers can declare deductions under Section 80G for donations made to eligible recipients. Accepted modes of donation include:

• Cheque: Donations made by way of cheque are eligible for deduction under Section 80G. 
• Demand Draft: Donations made using demand drafts also enjoy deductions.
• Cash (up to Rs 2,000): Donations can be made by cash for which deductions can be claimed, provided it does not exceed Rs 2,000. 

Important Note: Donations exceeding Rs 2,000 should be made by modes other than cash to qualify for deductions. 

Things to Remember When Claiming Section 80G Deduction

If you intend to claim tax benefits under Section 80G of the Income Tax Act, keep these key points in mind:

• Check Eligibility: Donate only to organizations approved under Section 80G to qualify for tax benefits.
• Maintain Documents: Keep a stamped donation receipt or Form 58 (if required) for tax claims.
• Cash Donation Rule: Donations above ₹2,000 must be made via cheque, demand draft, or electronic transfer (NEFT, UPI, bank transfer) to be eligible for deductions.

Conclusion 

Donations made to specified charities under Section 80G of the Income Tax Act serve the dual objective of doing good socially and availing tax benefits. While, in the Budget 2025, the mandate has been imposed on digitisation of transactions to certain organisations coupled with an increase in deductions, it has focused on an increased benefit in terms of transparency. To avail of the benefits maximally, donors must follow all the stipulations in documentation and payment standards. Meaningful initiatives can still garner significant tax savings if planning and deduction structures are understood correctly. For expert guidance on tax deductions and compliance, get in touch with professionals today.

FAQs:

Can 80G benefit be given by an employer?

No, 80G benefits apply to donations made to eligible charitable organizations, not to contributions by an employer.

Does 80G need proof?

Yes, a donation receipt with the organization’s details and registration number under 80G is required for claiming deductions.

Do we need to renew the 80G certificate?

Yes, as per recent amendments, 80G certificates must be renewed periodically as per government guidelines.

Can an NRI claim an 80G deduction?

Yes, NRIs can claim deductions under 80G for donations made to eligible Indian charities, provided they have taxable income in India.

How to get an 80G donation receipt?

The charitable organization receiving the donation issues the receipt, which must include the donor’s details, donation amount, and the 80G registration number.

Can an individual claim benefits under Section 80G?

Yes, individuals can claim deductions under 80G for donations made to eligible charitable institutions.

How do you know if it's a 100% or 50% deduction on 80G?

Under Section 80G of the Income Tax Act, donations are eligible for either a 100% or 50% deduction depending on the organization.

• 100% Deduction (No Cap): Donations to government-approved funds like the Prime Minister's National Relief Fund, National Defence Fund, and others are eligible for a full deduction with no limit.
• 50% Deduction (With or Without Cap): Donations to charitable organizations, educational institutions, medical relief organizations, and public trusts are eligible for a 50% deduction, possibly subject to a cap based on taxable income.

How to Verify: The donation receipt will list the 80G registration number and the deduction percentage. You can also verify on the Income Tax Department's website.

Is 80G tax deductible against capital gains?

No, 80G deductions are applicable only against gross total income and cannot be claimed against capital gains.