All about Section 80G of Income Tax Act, and 80G Deduction allowed under Income Tax Act

Introduction

Section 80G focuses on charitable giving and is one of the best ways to save money on taxes, not only that but it also helps the less fortunate in society. This section provides relief to the taxpayer, although there are some conditions that must be met before the taxpayer can benefit from the scheme of Section 80G. In this blog information on Income Tax Act 80G, 80G Deduction allowed, and other related information on Section 80G of Income Tax Act.

What is Section 80G of Income Tax Act?

Section 80G of the Income Tax Act largely deals with charitable gifts, with the goal of providing tax benefits to those who engage in philanthropic activities. Donations to specific funds or charities are eligible for tax deductions under this clause. When an individual pay any amount for the purpose of donation or a charity at that time an individual can  claim that amount as a tax deduction under section 80G of Income Tax Act. 

Section 80G deduction allowed by Income Tax Act

Certain criteria apply to donations made to qualifying trusts and charities that qualify for tax benefits. As per section 80G donations are divided into 4 category, below is the explanation of that 4 category. 

• A donation that are 100% tax-deductible (Up to 10% of adjusted gross total income is available)

This category includes payments to local governments or the government to support family planning, as well as donations to the Indian Olympic Association. Only 10% of the donor’s Adjusted Gross Total Income is eligible for deductions in such instances. Donations in excess of that amount are limited to 10% of the total amount.

• A donation that are 50% tax-deductible (Up to 10% of adjusted gross total income is available)

Donations to any local authority or the government that will use the money for any charitable purpose qualifies for this category of deductions. Only 10% of the donor’s Adjusted Gross Total Income is eligible for deductions in such instances. Donations in excess of this amount are subject to a 10% tax.

• A donation that comes under 100% deduction (without any restriction/limit)

Donations made under this category are eligible for a 100% tax deduction and are not subject to any qualification requirements. Such deductions are available for donations to the Prime Minister’s National Relief Fund, National Defence Fund, National Foundation for Communal Harmony, and National/State Blood Transfusion Council.

• A donation that comes under 50% deduction (without any restriction/limit)

Donations to trusts such as the National Children’s Fund, the Prime Minister’s Drought Relief Fund, and the Indira Gandhi Memorial Fund, among others, are eligible for a 50% tax exemption.

Related Read: Exemptions under Section 80G and 12A / 12AA

Documents need to be mentioned for claiming deduction for donation under Section 80G

• A person’s name
• Person’s PAN
• Address of an Individual
• Amount of donation – the breakdown of cash and other modes of contribution
• The amount that can be deducted

Certain examples that are 100% deducted without qualifying limit

• National Illness assistant Fund
• Prime Minister National Relief Fund
• Fund for Technology Development and Application
• National Defence Fund Set up by  the Central Government
• Prime Minister’s Armenia Earthquake Relief Fund

In order for a donation to be valid certain requirements needs to be fulfill as per Section 80G

• Donations made with non-taxable income are not eligible for a tax deduction. Therefore, only income that is allowable for the exemption will be considered for donation.
• Donation on check or cash is only permitted, donations in the form of clothes, food, medications, and other items being excluded under Section 80G.
• When it comes to donations to the Indian Olympic Association, only businesses are eligible for tax deductions.
• Donations to legitimate and registered trusts are the only ones that qualify for tax deductions.
• Any donation to the foreign Institutes or a political party will not be considered under Section 80G of Income Tax Act.

FAQs on Income Tax Act 80G

1. Who is eligible for a Section 80G Deduction?

• Anyone can seek a deduction under section 80G. It makes no difference whether the assessee seeking the deduction is an individual, a HUF, or a corporation.
• This deduction is available to both residents and non-residents.

2. Can I claim a deduction under Section 80G if I donated to the Prime Minister’s Relief Fund as a Non-Resident?

Yes, both non-residents and residents can benefit from claiming a deduction under Section 80G.

3. What types of donations qualify for the Section 80G deduction?

Only certain types of donations are eligible for a deduction under Section 80G of the Internal Revenue Code. Cash donations are only accepted up to INR 2000/-.

4. Which are the donation eligible for 50% deduction without Qualifying Limit?

• Indira Gandhi Memorial Trust
• Jawaharlal Nehru Memorial Fund
• Rajiv Gandhi Foundation
• Prime Minister’s Drought Relief Fund

5. Is it possible for me to claim an 80G deduction through my employer?

Yes, you can take advantage of Section 80G deductions through your employer. You will need a certificate from your employer confirming that the donation was made from your earnings.