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You must have heard that if you donate some money to a registered NGO, then you can save Tax on it. So, let’s find out what the rules are regarding this.
Section 80G of the Income Tax Act provides for a deduction in computing the total income of an assessee in respect of donations to certain funds, charitable institutions, etc.
What is the difference between donations and deductions?
A donation is the actual amount of money donated to a charitable organization, trust or fund. However, a deduction is the tax benefit you get for making that donation to any eligible donee, when computing your taxable income as per extant rules and provisions of Section 80G of the Act.
What is the difference between donor and donee?
A donor is a person who has paid any sum to the eligible institution or trust or fund as donation. A donee is the eligible organization or trust or fund which accepts the sum from various persons as donation.
Who is eligible to claim deduction under Section 80G?
Any taxpayer – including individuals, HUFs, companies, firms, or any other person – who has taxable income and has made donations to an eligible entity, can claim a deduction under this section.
What are the types of donations allowed under 80G?
As per Section 80G(1), 80G(2) and 80G(4) of the Act, donations fall into four categories based on deduction limits:
| Category | Deduction Amount | Maximum Limit |
|---|---|---|
| 100% without limit | Full donation amount | No limit |
| 50% without limit | 50% of donation amount | No limit |
| 100% with limit | Full donation amount | 10% of adjusted gross total income |
| 50% with limit | 50% of donation amount | 10% of adjusted gross total income |
Are all donations eligible for 80G deduction?
No. Only donations made to specified trusts, charitable funds or institutions, which are specifically mentioned under section 80G(2)(a) of the Act and funds or institutions registered and approved under Section 80G by the Income Tax Department, are eligible for deduction. It is mandatory for donors to verify and confirm the relevant details of the trust, institution, or charitable funds (donee) to ensure its eligibility under Section 80G and to determine the correct category of deduction applicable.
Can deduction under Section 80G be claimed under the new tax regime?
No, deduction under Section 80G cannot be claimed if you opt for the new tax regime as per the section 115BAC of the Income Tax Act, 1961.
How to claim 80G deduction while filing ITR?
The steps for claiming deduction under section 80G are as under:
- Go to “Deductions under Chapter VI-A” in your ITR form.
- Select Section 80G.
- Enter the details of the donee, donation amount, and eligible deduction.
What details are required to claim 80G deduction?
To claim the deduction, you need:
- Donation receipt from the trust/NGO with.
- Name and PAN of the Donee
- Address of the Donee
- Registration number under 80G
- Amount donated
