All About Section 80G | How to claim Income Tax Deduction of Donations Paid

The Indian government has been encouraging people to donate to the poor and needy regularly to promote the concept of charity, and this donation can also be claimed as a deduction under Section 80G.

There are various government and non-governmental organisations that aim to improve the lives of the underprivileged, and you can donate to these organisations, which will ensure that your money is used wisely.

To encourage people to donate, the government provides income tax deductions for the amount donated under Section 80G. A person’s donation can be claimed as a deduction under Section 80G when filing his income tax return.

Any taxpayer (individual, partnership firm, HUF, company, LLP, etc.) can claim this Donation Deduction, regardless of whether he earns money from a wage or a business. The deduction available under Section 80G is in addition to the Rs. 1,50,000 deduction available under Section 80C.

Conditions for claiming a deduction for donation under section 80G

Except in circumstances where the donation is made in kind, all donations are eligible to be claimed as a deduction under Section 80G. (eg: food, clothes, medicine etc). The donor must additionally provide proof of payment to claim this deduction. In this case, the recipient trust issues a stamped receipt, the information which the taxpayer should include in his Income Tax Return.

• The receipt should necessarily mention the following details:
• The 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 u/s 80G along with its validity
• Maximum Limit for Deduction under Section 80G

In some situations, the deduction that can be claimed for donations given under section 80G has no maximum limit. However, in some situations, the deduction for charitable contributions under Section 80G is limited to 10% of the taxpayer’s Adjusted Gross Total Income. After deductions for donations, the remaining income is taxable according to the taxpayer’s tax bracket.

The type of institution to which the money has been donated determines whether a deduction is allowed without a maximum limit or is limited to 10% of adjusted gross total income. The gifts to institutions that are eligible for a deduction with no restriction and donations to institutions that have a maximum deduction limit are listed below.

The following contributions are eligible for a deduction under section 80G. However, in some situations, the complete amount provided can be deducted, while in others, only half of the amount donated can be claimed as a deduction.

• National Defence Fund set by the Central Govt.
• Prime Minister’s National Relief Fund
• Prime Minister’s Armenia Earthquake Relief Fund
• National Foundation for Communal Harmony
• University/ Education Institution of National eminence approved by the prescribed authority
• Maharashtra Chief Minister’s Earthquake Relief Fund
• Any Fund set up by the State Govt of Gujarat, exclusively for providing relief to the victims of the earthquake in Gujarat
• Zila Saksharta Samiti constituted in any district
• National Blood Transfusion Council or any State Blood Transfusion Council
• Any fund set up by the state Govt to provide Medical Relief to the poor
• Army Central Welfare Fund or Indian Naval Benevolent Fund or the Air Force Central Welfare Fund
• National Illness Assistance Fund
• Andhra Pradesh Chief Minister’s Cyclone Relief Fund
• Chief Minister Relief Fund or the Lieutenant Governor’s Relief Fund in respect of any State or Territory
• National Sports Fund set up by the Central Govt
• National Cultural Fund set up by the Central Govt
• Fund for Technology Development and Application, set up by the Central Govt
• National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities

Claiming deduction under Section 80G in Form 16

When paying a salary to an employee, the employer is required to subtract TDS from the salary and then pay the amount after the deduction of income tax. The amount deducted by the employer as TDS is shown on Form 16.

The deductions claimed by the employee under various parts of the income tax statute must be reported to the employer for income tax computation. However, if an employee is claiming a deduction under section 80G, the advantage of this deduction can only be claimed through the employer provided that the donation is made solely to the funds listed above (i.e. all funds from which deductions are authorised without any maximum limit).

Donations to funds with a maximum limit of 10% of gross total income are not eligible for deductions through the employer. Deductions for such donations can only be claimed when income tax returns are filed.