Section 80G provides for deductions on account of donation made to various funds , charitable organizations etc. In cases where employees make donations to the Prime Minister’s National Relief Fund, the Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund through their respective employers, it is not possible for such funds to issue separate certificate to every such employee in respect of donations made to such funds as contributions made to these funds are in the form of a consolidated cheque. An employee who makes donations towards these funds is eligible to claim deduction under section 80G. It is, hereby, clarified that the claim in respect of such donations as indicated above will be admissible under section 80G on the basis of the certificate issued by the Drawing and Disbursing Officer (DDO)/Employer in this behalf- Circular No. 2/2005, dated 12-1-2005.
No deduction under this section is allowable in case of amount of donation if exceeds Rs. 10000/- unless the amount is paid by any mode other than cash.
Tax Deduction under Section 80G for Donations towards Social Causes
Have you donated money for charity, social or philanthropic purposes, or, have made contributions towards a National Relief Fund? If yes, then you could use these donations to reduce your tax outgo. The Income Tax Act encourages charitable deeds towards the poor and needy, and offers donors tax benefits under Section 80G. Read on to find out more about this section.
Understanding Section 80G
Section 80G offers a tax deduction for donations to certain prescribed funds and charitable institutions. Here are the details of the section.
This section is applicable to all assessees, who make an eligible donation, whether an individual, HUF, NRI or a company.
The extent of deduction is either 50% or 100% of the contribution, depending on the charitable institution donated to.
For certain funds, the aggregate deduction is limited to 10% of the “Adjusted Gross Total Income”. So, in such cases, even if you do make a donation larger than 10% of your Adjusted Gross Total Income, the donation amount eligible for claiming a deduction would be capped at 10% of the Adjusted Gross Total Income.
The Adjusted Gross Total in this case, is the gross total income minus long-term capital gain, short term capital gain and all deductions u/s 80CCC to 80U except any deduction under this section.
Calculation of Adjusted Gross Total Income
Adjusted Gross Total Income =
Gross Total Income
Less Long-term capital gains, if any, which have been included in the GTI
Less All deductions permissible under section 80C to 80U (except for deductions under section 80G)
Less Any income on which income tax is not payable (for example, agricultural income)
Less Certain incomes of NRIs (as per Section 115
Scope of Deduction
- The donation may be paid either out of taxable or exempted income.
- Only donations made in cash or cheque are eligible for deductions. Donations made in kind, in the form of food, clothing, medicines etc are not eligible.
- Donations to foreign charitable trusts or to political parties are not eligible for any deduction.
- For donations made to Indian Olympic Association, any association notified u/s 10(23) for development of infrastructure for sports or games, or for sponsorship of sports or games, only a company is eligible for deduction.
- Donations made to not all charitable institutions qualify for a deduction. Here is a list of approved charitable institutions and funds that qualify for a deduction.
Donations 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.
Donations 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 the following are eligible for 100% deduction subject to 10% of adjusted gross total income
- Donations to the Government or a local authority for the purpose of promoting family planning.
- Sums paid by a company to Indian Olympic Association
Donations to the following are eligible for 50% deduction subject to 10% of adjusted gross total income
- Donation to the Government or any local authority to be utilized by them for any charitable purposes other than the purpose of promoting family planning.
The Donation Receipt
In order to claim deduction, it is mandatory for the donor to furnish a proof of payment towards the eligible fund or institution. A stamped receipt is issued by the recipient trust in this regard, which must be attached by the assessee along with the income tax returns.
The receipt must include the following details.
- Name and address of the trust
- The name of the donor
- The amount donated, mentioned in words and figures
- The registration number of the trust, as given by the income tax department under section 80G, along with its validity period.
Tax benefits cannot be claimed without the above mentioned details and document.
Donations deducted from Salary
Where employees have contributed towards eligible charitable causes from their salaries and the donation receipt is on the employer’s name, a deduction under section 80G could still be claimed. In such cases, the employer would need to issue a certificate mentioning that the contribution was made from the employee’s salary account.
There are many trusts in India engaged in charitable activities. In order to ensure that only contributions to genuine trusts entail a tax benefit, the government has brought in registration of trusts. Thus, before you donate, check to see, if the trust you are donating to is registered and has the tax exemption certificate, which is popularly known as the 80G certificate.
The entities allowed for sec 80G deduction are:
|Particulars||Amount of deduction allowed (as a % of the contribution)||Whether restricted to 10% of Gross Total Income (GTI)|
|National Defense Fund||50||No|
|Jawaharlal Nehru Memorial Fund||50||No|
|Prime Minister’s Drought Relief Fund||50||No|
|Prime Minister’s National Relief Fund||100||No|
|Prime Minister’s Armenia Earthquake Relief Fund||100||No|
|Africa (Public Contributions-India) Fund||100||No|
|National Children’s Fund||100||No|
|Indira Gandhi Memorial Trust||50||No|
|Rajiv Gandhi Foundation||50||No|
|National Foundation for Communal Harmony||100||No|
|Approved university / educational institution||100||No|
|Maharashtra Chief Minister’s Earthquake Relief Fund||100||No|
|Zila Saksharta Samiti||100||No|
|National Blood Transfusion Council||100||No|
|Medical Relief Funds of a state government||100||No|
|Army Central Welfare Fund, Indian Naval Benefit Fund, Air Force Central Welfare Fund||100||No|
|Andhra Pradesh Chief Minister’s Cyclone Relied Fund||100||No|
|National Illness Assistance Fund||100||No|
|Chief Minister’s or Lt. Governor’s Relief Fund (Some conditions apply)||100||No|
|National Sports Fund||100||No|
|National Cultural Fund||100||No|
|Fund for Technology Development and Application set up by the Central Government||100||No|
|National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities||100||No|
|Any other approved fund or institution||50||Yes|
|Donations to government / local authority for charitable purposes (excluding family planning)||50||Yes|
|Government / local authority / institution / association towards promoting family planning||100||Yes|