Donations Eligible Under Section 80G: For promoting the concept of charity towards the poor and needy, the government of India has been regularly encouraging citizens to donate, and this donation could also be claimed as a deduction under Section 80G.
There are many government organisations, including NGO’s which are working for the upliftment of the poor, and one can choose to make donations to these designated organisations, which will, in turn, ensure that the money is being used for the right purposes.
- Section 80G
- What is the mode of payment?
- Conditions for claiming the deduction for donation under the section 80G
- How to claim for the deduction
- Donations that are Eligible for 100% Deduction Without any Qualifying Limit
- Donations that are Eligible for 50% Deduction Without any Qualifying Limit
- Donations that are Eligible for 100% Deduction Subject to 10% of Adjusted Gross Total Income
- Claiming deduction under the Section 80G in Form 16
- Donations deducted by the employer from the employee’s salary.
- Donation made to any institution or fund.
Contributions that are made to certain relief funds and charitable institutions could be claimed as a deduction under Section 80G of the Income Tax Act. However, all donations are not eligible for this deduction under section 80G. Only the donations made to suggested funds qualify as a deduction. This deduction could be claimed by any taxpayer – company, individual, firm or any other entity.
What is the Mode of Payment?
The deduction could be claimed only if the contribution has been made through a cheque, draft or in cash. However, the deduction is not allowed for donations that are made in cash exceeding the amount of Rs 10,000.
In-kind contributions like food, material, clothes, medicines, etc., don’t qualify for deduction under section 80G. From Financial Year 2017-2018 onwards: Any donations made in cash exceeding the amount of Rs 2,000 will not be permitted as a deduction.
The donations above the amount of Rs 2,000 must be made in any mode apart from cash to qualify as a deduction under section 80G. Donation Amount: The different donations specified in section 80G are eligible to determine up to either 100% or 50% with or without any restriction, as provided in section 80G.
Conditions for Claiming the Deduction for Donation under the Section 80G
Donations made are eligible for claiming as a deduction under Section 80G in all cases except in cases when the donation has been made of any kind (e.g., food, clothes, medicine etc.). For claiming this deduction, the donor also has to provide proof of payment. A receipt that is stamped is issued by the recipient trust in this regard. Details of that should be mentioned by the taxpayer when filing their Income Tax Return.
The receipt should surely mention the following details
- Name of the trust
- Address of trust
- Name of the donor
- The donated amount (mention in words and figures)
- The trust’s registration number, as given by the income tax department u/s 80G, along with its validity.
How to Claim for the Deduction?
To claim the deduction, the following details need to be submitted in one’s Income Tax Return
- Name of the recipient
- PAN of the recipient
- Address of the recipient
- Contribution Amount
Donations that are Eligible for 100% Deduction Without any Qualifying Limit
- The government’s set up National Defence Fund
- National Relief Fund set up by the Prime Minister.
- National Foundation established for Communal Harmony.
- An approved educational institution or university of National prominence
- The Zila Saksharta Samiti constituted in any of the districts under the chairmanship of the Collector of this district.
- Fund established by a State Government offering medical relief for the poor
- The National Illness Assistance Fund
- The National Blood Transfusion Council
- Any State Blood Transfusion Council
- National Trust for Welfare of Individuals with Autism, Mental Retardation, Cerebral Palsy, and Multiple Disabilities
- National Cultural Fund
- National Sports Fund\Fund for Application and Technology Development
- National Children’s Fund
- Lieutenant Governor’s Relief Fund or Chief Minister’s Relief Fund regarding any State or Union Territory
- Army Central Welfare Fund or the Air Force Central Welfare Fund or the Indian Naval Benevolent Fund, Chief Minister’s Cyclone Relief Fund Andhra Pradesh, 1996
- Maharashtra Chief Minister’s Relief Fund established between October 1st and 6th, 1993.
- Earthquake Relief Fund established by the Cheif Minister, Maharashtra
- Any fund established by the State Government of Gujarat exclusively in order to provide relief to the earthquake victims in Gujarat
- Any institution, trust or fund to which Section 80G(5C) applies to provide relief to earthquake victims in Gujarat (contribution given during January 26, 2001, and September 30, 2001) or
- Armenia Earthquake Relief Fund established by the Prime Minister
- Africa (Public Contributions – India) Fund
- Swachh Bharat Kosh (applicable from FY 2014-15)
- Clean Ganga Fund (suitable from FY 2014-15)
- The National Fund for Control of the Drug Abuse (suitable from FY 2015-16)
Donations that are Eligible for 50% Deduction Without any Qualifying Limit
- The Jawaharlal Nehru Memorial Fund
- The Prime Minister’s Drought Relief Fund
- The Indira Gandhi Memorial Trust
- The Rajiv Gandhi Foundation
Donations that are Eligible for 100% Deduction Subject to 10% of Adjusted Gross Total Income
- Contributions made to the government or any other approved local authority or institution to be utilised for promoting family planning.
- Donation made by any Company to the Indian Olympic Association or any other notified association or institution established in India to develop infrastructure for games and sports in India or the sponsorship for sports and games in India.
- Donations that are Eligible for 50% Deduction Subject to the 10% of the Adjusted Gross Total Income
- Any other fund or institution satisfying the conditions mentioned in the Section 80G(5)
- The government or any local authority is to be utilised for any charitable purpose apart from the purpose of promoting family planning.
- Any authority constituted in India to deal with and satisfy the need for housing accommodation or the purpose of planning, development of towns, cities, villages or both.
- Any corporation that has been referred to in Section 10(26BB) for promoting the interest of the minority communities.
- For repairing or renovation of any notified temple, mosque, gurudwara, church or other religious places.
Claiming Deduction under the Section 80G in Form 16
When paying salary to an employee, the employer needs to deduct the TDS on the employee’s salary and then pay salary after deducting income tax. The amount reduced as TDS by the employer is reflected in Form 16.
For the computation of the income tax, deductions claimed by the employee under the various sections of the income tax act must be informed to the employer. However, if an employee is claiming deduction under section 80G, the benefit of this deduction could only be claimed through the employer if the donation is made only to the funds whose names have been mentioned above (i.e., all funds deductions from which it is allowed without any maximum limit)
If the donation is made to funds that have a maximum limit of 10% of Gross Total Income, reductions in such cases can’t be claimed by the employer. Deductions for these donations can only be claimed during the time of filing income tax returns.
Donations Deducted by the Employer from the Employee’s Salary
An employee has paid for a donation from their salary, and the amount has been deducted from their salary by the employer. Deduction under section 80G could still be claimed. In such scenarios, although the donation receipt is in the employer’s name, the employer will have to issue a certificate stating that the contribution had been made from the employee’s salary account.
Donation Made to any Institution or Fund
Donation made to any institution or fund is allowed only if it is established in India for a charitable purpose and fulfills the stated condition.
where the fund or institution derives any income, such income wouldn’t be liable to be inclusive in its total income under provisions of sections 11 and 12 or the clause (23AA) of the clause (23C) of section 10:
given that where a fund or institution derives any income, be it profits and gains of business, the condition which such income wouldn’t be liable to inclusion in the total income under the provisions of section 11 might not apply concerning such income, in case —
- the fund or institution maintains separate books of accounts in respect to such business;
- the donations made to these institutions or fund are not used by it, directly or indirectly, for any such business
- the institution or fund issues to the person donating a certificate to the effect that it keeps separate books of account related to such business as well as that the donations received by them are not going to be used, directly or indirectly, for such business
The instrument under which these institution or funds are constituted doesn’t, or the rules governing these institutions or funds do not contain any provision for the transferor application at any time of the complete or any part of one’s income or assets of the institutions or funds for any purpose apart from a charitable purpose;
the institutions or funds are not expressed to be for the benefit of any specific religious community. However, a fund or institution incurring expenditure, during any of the former years, which is of a religious nature for any amount not exceeding five percent of its total income in that last year should be considered to be a fund or institution to which the provisions of this section apply to.
This donation to such fund is permitted as a deduction. An institution or fund set up for the benefits of Scheduled Castes (SC), backward classes, Scheduled Tribes (ST) or for women and children shall not be considered to be an institution or fund showcased to be for the benefits of a religious community or caste.
the fund or institution maintains regular accounts of all the receipts and expenditure;
the fund or institution is either constituted as a charitable public trust or has been registered under the Societies Registration Act, from the year 1860 (21 of 1860), or under any law, simultaneously to that Act in force in any part of the subcontinent or under the section 25 of Companies Act, of the year 1956 (1 of 1956), or is a University that has been established by law, or is any other educational institution that can be by the Government or by a University established by the law, or affiliated to any University established by the law, or is an institution financed wholly or in part by the Government or local authority;
concerning donations made after the 31st day of March 1992, the institution or fund is for the time being approved by the Commissioner following the rules made on this behalf; and
A deduction to which the entity is entitled in respect of any of the donations that have been made to a fund or institution to which the sub-section (5) applies should not be denied purely on either or both of the stated grounds, namely:
- that, after the donation, any part of the income of the fund or the institution has become chargeable to tax due to the non-compliance with any of these provisions of section 11, 12 or 12A
- that, under the clause (c) of sub-section (1) of section 13, the exemption under section 11 or 12 is denied to the institution or fund concerning any income coming to it from any investment referred to in clause (h) of sub-section (2) of section 13 where the average of the funds invested by it in a examine referred to in the said clause (h) doesn’t exceed five percent of the capital of the concern.