Donating to Charity? Here’s How Section 80G Reduces Your Tax Burden

The Income Tax Department has recently issued the Frequently Asked Questions (FAQs) related to Section 80G of the Income Tax Act, 1961. The said section helps taxpayers reduce their total taxable income in case they have donated money to approved charitable organisations or relief funds.

Taxpayers falling under this category sometimes are not aware of how much income can be deducted under Section 80G. If the donations include “special funds” (types are mentioned in sub-section 2 of the Income Tax Act). Taxpayers are given a 100% deduction on such special funds, and a 50% deduction is given on the remaining donation amount. If donations are made to institutions falling under the “other eligible funds” category, then only a 50% deduction is given from the total donated amount.

There is only one condition: if you claim a deduction under Section 80G for any donated amount, then you are not eligible to claim the same amount under any other section of the Income Tax Act of 1961. The income tax act clearly reads, “One donation, one deduction only.” Another rule relating to Section 80G is that one can only claim a deduction if the amount of cash donations does not exceed Rs. 2000. Cheque, draft, or electronic modes of payment are allowed. Deductions are not permitted for donations made in kind; they are only allowed for monetary donations.

Refer to the official FAQs PDF for complete information.