Eligibility For Donation Under Section 80G of Income Tax Act
Introduction
Donations under Section 80G of the Income Tax Act allow individuals and organizations to claim tax deductions on contributions made to NGOs or charitable trusts. This means that donors can benefit from tax savings when they donate to eligible organizations. Additionally, the government provides funds or grants to trusts that are registered under Section 80G.
What is section 80G?
Section 80G is a provision of an Income Tax Act. An individual or company donating to charitable trust, can get donation benefits under section 80G. The purpose of this section is to support entities that are engaged in social or cultural development activities. As donations under section 80 are exempt from Income Tax, It attracts more donors to help people.
The finance minister, in the union budget announcement, made no changes to the Income Tax deduction under Section 80G.
Budget 2023 update under section 80G
According to the 2023 budget, the funds listed below make donations eligible for deductions under Section 80G.
- Rajiv Gandhi Foundation
- Indira Gandhi Memorial Trust
- Jawaharlal Nehru Memorial Fund
Permitted donations under 80G
An individual or an organization willing to claim deduction under section 80G must ensure that the organization they are making donation is meeting the legal requirement. Charitable trust or organization must register under section 12A to claim the 80G certificate. Individuals are highly requested to check all the details before making donations.
Not all donations are eligible to claim deduction under section 80G.
Conditions for claiming deduction under 80G
- Make donations via draft, cheque, digital payment, or cash. (Donations above ₹2000 are not eligible.)
- The trust or organization must register under 80G.
- The donor must have a receipt which contains; Name and PAN of the trust, amount donated, and the registered number of the trust under 80G.
Get expert help with 80G5 registration and the Online 12A registration for tax exemptions and compliance. Ensure smooth approval with our professional support!
Categories of Donations Under Section 80G
Donations which are made to eligible trusts or organizations can get tax benefits, but certain conditions apply. Donations under Section 80G are divided into four main categories:
- 100% Deduction (No Limit): Some donations qualify for a full 100% tax deduction without any limit. This includes donations to funds like the National Defense Fund, Prime Minister’s National Relief Fund, The National Foundation for Communal Harmony, and the National/State Blood Transfusion Council.
- 50% Deduction (No Limit): Donations to specific trusts, such as the Prime Minister’s Drought Relief Fund, National Children’s Fund, and Indira Gandhi Memorial Fund, qualify for a 50% tax deduction with no upper limit.
- 100% Deduction (Limited to 10% of Income): Donations made to local authorities or the government for family planning, as well as donations to the Indian Olympic Association, qualify for a 100% deduction. However, this is limited to 10% of the donor’s Adjusted Gross Total Income. Any donation amount beyond this limit does not qualify for deductions.
- 50% Deduction (Limited to 10% of Income): Local authorities or the government qualify donations made for general charitable purposes for a 50% tax deduction. However, donors can only claim deductions on up to 10% of their Adjusted Gross Total Income; any amount beyond this limit does not qualify.
Eligibility to claim deduction under 80G
Both an individual and a company can claim a deduction under Section 80G for donations made to charitable organizations. Following persons are eligible to claim deduction under section 80G;
- Individuals
- Hindu Undivided Family
- Non-Resident Indian
- Firms
- Companies
Required documents to claim deduction Under section 80G
- Duly stamped receipt
- Form 10BE
- Photocopy of 80G certificate
- 80G registration number of trust on receipt
How to claim deduction under section 80G?
To claim tax deductions on donations under Section 80G while filing an Income Tax Return (ITR), an individual needs to provide the following details:
- Name of the organization (Donee)
- PAN of the organization
- Address of the organization
- Total amount donated
- Amount eligible for deduction
Where to Enter the Donation Details in ITR?
While filing an ITR, an individual must enter the donation details in one of the following tables based on the type of deduction:
- For donations that qualify for a 100% deduction with no limit – Table A
- For donations that qualify for a 50% deduction with no limit – Table B
- For donations that qualify for a 100% deduction but are subject to a limit – Table C
- For donations that qualify for a 50% deduction but are subject to a limit – Table D
- By ensuring you provide the correct details in the right table, you can easily claim tax benefits on your donations.
Conclusion
Donations under Section 80G not only help in supporting social causes but also provide tax benefits to donors. it is important to verify the registration status of the organization and keep the required documents to claim deductions successfully. Making informed donations ensures that your contributions reach the right hands and offer financial benefits in return.
Suggested Read :
Difference between 12A and 80G
How to Download 12A and 80G Certificate?
NGO Donation Tax Exemption under Section 80G
Deduction Limit For Individual Under Section 80G
FAQ
1. Who can claim deductions under Section 80G?
Any individual, firm, or organization can claim donation under section 80G.
2. How can an individual claim a tax deduction for donations under Section 80G?
To claim the deduction, an individual need to provide details of the donee (name, PAN, address), the amount donated, and the amount eligible for deduction while filing your Income Tax Return.
3. Are all donations eligible for tax deductions under Section 80G?
No, only donations made to organizations registered under Section 80G are eligible.
4. What documents are required to claim deductions under Section 80G?
Duly stamped donation receipt and photocopy of the donne’s 80G registration certificate.
5. Has there been any change in Section 80G deductions in the recent budget?
No, the Finance minister has not been introduced any changes to tax deduction under section 80G.
Leave a Comment