Section 80G: Tax Deduction for Donations and Exemption Limit

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Donations to prescribed fund, charitable institute, few CSR activities etc are allowed as a deduction in Income tax under section 80G. Prescribed funds/institution will get discussed later in this article.

Eligibility

So, Who is eligible for deduction under section 80G ?

Any assessee making a donation to prescribed funds or institute can claim deduction u/s 80G. The term assessee includes Individual, Company, LLP, Partnership Firm, AOP, HUF, BOI etc.

Restricted mode for donation under section 80G

Cash donation in excess of Rs.10,000/- is prohibited/ not allowed. However, from 1st April 2018 Cash Donation for more than Rs.2,000/- is prohibited/not allowed as deduction under section 80G.

 

Required Document for getting deduction under section 80G

1. Stamped Receipt containing following details

  • Name, Address, and PAN of the trust or institution
  • Registration number of Trust under section 80G and period up to which such registration is valid
  • Name of Assessee and amount of donation

2. Xerox/Photocopy of 80G Certificate of trust or institution. This certificate is not required while filing IT return. However, it should be kept by the assessee for proving his/her contribution to a registered trust/institute.

Exemption Limit under Section 80G

Under section 80G, there is no defined maximum deduction limit. It all depends on the type of fund or institute you donate and sometimes also to your adjusted gross total income.

For determining exemption limit under section 80G you should classify donation in below 2 categories:

  1. Eligible donation Without any Limit
  2. Eligible donation With Limit of 10% of Adjusted Gross Total Income

Further, there is funds/institute in which 100% of contribution is allowed as deduction whereas in some other funds/institute deduction is limited to 50% of contribution.

Confused? 🙁 Let’s understand it with an example:

Mr. Ram, having adjusted gross total income of 5 lakh made following donations:

Sl no Fund/Institute Deduction Donation Amt Eligible
Eligible donation Without any Limit
1 Prime Minister’s National Relief Fund 100% 30000 30000
2 Prime Minister’s Drought Relief Fund 50% 10000 5000
Eligible donation With limit of 10% of AGTI
3 West Bengal govt. for family planning 100% 50000 50000
4 CRY Org (helping childs) 50% 8000 4000**
Total deduction under section 80G 85000

**The total eligible deduction u/s 80G for contribution with limit of 10% of adjusted gross total income is Rs.50,000/- (10% of 5 lakh).

 

Note:

Calculation of Adjusted Gross Total income
Particulars Amt.
Income under all five heads xx
Less:
Deduction u/s 80CCC to 80U
(excluding 80G)
(xx)
Exempted Income (xx)
Long term capital gain (xx)
Short term capital gain
(u/s 111A)
(xx)
Income u/s 115A, 115AB,
115AC, 115AD and 115D relating to non-residents and foreign companies
(xx)
Adjusted Gross Total income xxxx

 

80G deduction for Employees

Employees are required to give details of donations under section 80G to their employer. These details will be used to deduct appropriate TDS on salary.

As we can see in the above example, donation to few funds are restricted to 10% of adjusted gross total income. Generally, these types of donations are not considered by the employer. Only eligible donations without limit are considered while calculating TDS on salary.

While filling IT return employee can consider donations not considered by the employer.

Also Read: HRA deduction and its calculation and Income Tax on Pension

In case, where donation is deducted by the employer from employee’s salary account and the donation receipt is in the name of the employer, a certificate is required to be issued by the employer specifying that donation was deducted from emplyee’s salary account.

 

Relevant FAQ

1. Most of my income is given away in charity and I am left with just enough money to meet my personal requirements. What will be considered as my income? (From Dept.)

What is done after the income is earned by you will not give you tax exemption. However, contribution to approved institutions will give you the benefit of deduction from taxable income under section 80G subject to limits specified therein.  Also Read: 10 Tax-Free Income

2. Can I claim donation to political party and to an entity engaged in scientific research under section 80G?

No, deduction under section 80G is not available for donation to political party and also to any entity engaged in scientific research. Section 80GGC provides deduction for donation to any political party whereas section 80GGA provides deduction for donation to an entity engaged in scientific research.

 

Eligible Funds or Institute under section 80G

                              100% deduction of Eligible donation Without any Limit
1 The National Defence Fund set up by the Central Government
2 The Prime Minister’s National Relief Fund
3 The Prime Minister’s Armenia Earthquake Relief Fund
4  the Africa (Public Contributions – India) Fund
5 The National Children’s Fund
6 The National Foundation for Communal Harmony
7 A University or any educational institution of national eminence
8 The Maharashtra Chief Minister’s Relief Fund during the period beginning on the 1st day of October, 1993 and ending on the 6th day of October, 1993 or to the Chief Minister’s Earthquake Relief Fund, Maharashtra
9 Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat
10 Any Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
11 The National Blood Transfusion Council or to any State Blood Transfusion Council
12 any fund set up by a State Government to provide medical relief to the poor
13 the Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund
14 the Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
15 the National Illness Assistance Fund
16 the Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund in respect of any State or Union territory
17 The National Sports Fund to be set up by the Central Government
18 The National Cultural Fund set up by the Central Government
19 The Fund for Technology Development and Application set up by the Central Government
20 The National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
21 The Swachh Bharat Kosh, set up by the Central Government, other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under sub-section (5) of section 135 of the Companies Act, 2013 (18 of 2013)
22 The Clean Ganga Fund, set up by the Central Government, where such assessee is a resident and such sum is other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under sub-section (5) of section 135 of the Companies Act, 2013 (18 of 2013)
23 The National Fund for Control of Drug Abuse constituted under section 7A of the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985)
                                    50% deduction of Eligible donation Without any Limit
24 Jawaharlal Nehru Memorial Fund
25 Prime Minister’s Drought Relief Fund
26 Indira Gandhi Memorial Trust
27 Rajiv Gandhi Foundation
                               100% deduction of Eligible donation With Limit of 10% of
                                                  Adjusted Gross Total Income
28  The Government or to any such local authority, institution or association to be utilised for the purpose of promoting family planning
29 Donation by a company to the Indian Olympic Association or to any other association or institution established in India for—
(i) the development of infrastructure for sports and games; or
(ii) the sponsorship of sports and games,
in India;
                               50% deduction of Eligible donation With Limit of 10% of
                                                   Adjusted Gross Total Income
30 Fund or institute fulfilling condition under section 80G(5)
31 Government or any local authority to be utilised for any charitable purpose other than the purpose of promoting family planning
32 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
33 Any corporation referred in Section 10(26BB) for promoting interest of minority community
34 For repairs or renovation of any notified temple, mosque, gurudwara, church or other place

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