How to claim income tax deduction for donation under section 80g

01/06/24

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What is Section 80G Deduction? Who Can Claim It?

Section 80G of the Income Tax Act provides tax relief to taxpayers who donate to approved charitable institutions. It serves as an additional tax-saving avenue beyond Section 80C and promotes social responsibility through philanthropy. Donations made to eligible organisations can qualify for a deduction of up to 50% of the contributed amount, subject to prescribed limits.

This deduction can be claimed by Individuals, Hindu Undivided Families (HUFs), Companies, Partnership Firms, and Non-Resident Indians (NRIs). The eligible deduction is capped at 10% of the taxpayer’s adjusted gross total income, making Section 80G a practical way to support charitable causes while lowering taxable income.

Types of 80G Deductions: 100% vs 50% With & Without Limit

Under Section 80G, deductions on donations are classified based on the percentage allowed and applicable limits. The eligibility depends on the type of fund or institution to which the donation is made.

100% Deduction Without Any Limit

• National Defence Fund
• Prime Minister’s National Relief Fund
• National Foundation for Communal Harmony

50% Deduction Without Any Limit

• Jawaharlal Nehru Memorial Fund
• Prime Minister’s Drought Relief Fund

50% Deduction (Limited to 10% of Adjusted Gross Total Income)

• Donations to approved NGOs and charitable institutions
• Organisations engaged in social welfare, education, or healthcare

These categories help taxpayers understand how much deduction they can claim on their charitable contributions.

What is Adjusted Gross Total Income for 80G Limit?

Adjusted Gross Total Income (AGTI) is used to calculate the maximum deduction allowed under Section 80G. It refers to the gross total income after excluding incomes that are fully exempt from tax, such as agricultural income, and after reducing deductions already claimed under other provisions of Chapter VI-A. The 10% limit applicable to certain 80G donations is calculated on this adjusted figure, ensuring that tax benefits remain within prescribed limits.

Important 80G Rules & Limits You Must Know

To claim an income tax deduction under Section 80G, taxpayers must follow certain rules related to the mode and amount of donation. Key points to keep in mind include:

• Donations eligible for Income Tax Deduction for Donation must be made via cheque, demand draft, online transfer, or cash.
  
• Cash donations exceeding ₹2,000 are not eligible for deduction under Donation under 80G provisions.
  
• To ensure eligibility, transparency, and compliance, it is advisable to donate through cheque or digital payment modes, supporting the government’s cashless economy initiative.
  
• Deductions are allowed only for monetary donations, subject to the prescribed 80G limits under the Income Tax Act.
  
• Bal Raksha Bharat does not accept cash donations, irrespective of the amount.
  

Following these rules ensures a smooth and valid income tax deduction claim for donations made under Section 80G.

**Please note that Bal Raksha Bharat  does not accept any donations in cash irrespective of any amount.

How to Claim 80G Deduction in ITR

Step 1: Donate only to 80G-approved organisations

Ensure that your donation is made to an institution or fund approved under Section 80G of the Income Tax Act. Only donations to eligible organisations qualify for tax deduction, so always verify the 80G registration before contributing.

Step 2: Get proper receipt and Form 10BE

Collect a valid donation receipt mentioning the donor’s name, PAN, amount donated, and 80G approval number. Additionally, ensure you receive Form 10BE, which is mandatory for claiming the deduction.

Step 3: File your ITR and enter deduction in the correct schedule

While filing your Income Tax Return, report the donation details under Schedule 80G and ensure they match Form 10BE to successfully claim the deduction.

Documents Required to Claim Deduction Under Section 80G

As per Clause (viii) and (ix) inserted in sub-section (5) of Section 80G w.e.f. 1.4.2021, requiring institution or fund approved under Section 80G to file a ‘Statement of donation received(in Form No.10BD) having details of donors and donations received’ and also to issue the ‘Certificate to the donor(in Form No.10BE) having details of the donee, details of donor and details of donation received during the financial year’, on or before 31st May immediately following the financial year in which the donation is received.

It has been further stated that deduction on account of the donation under 80G shall be allowed to the donor only on the basis of the Statement filed by the donee institution or fund. Bal Raksha Bharat shall issue the ‘Certificate(in Form No.10BE) under Section 80G to the Donor having details of the organisation, details of Donor and details of the donation received during the financial year and on the basis of ‘Statement of donation received(in Form No.10BD)’ filed by the Bal Raksha Bharat, details of the Donation will appear in the Income Tax Return of Donor to claim deduction under Section  80G income tax.

Also Read: Income Tax Exemption: The Ultimate Strategy Guide

Procedure For An Ngo To Qualify For Approval Under Section 80g Income Tax

For an NGO to qualify for approval under Section 80G of the Income Tax Act, it needs to fulfil certain criteria for donation under 80G. It should be registered under the Societies Registration Act 1860 or under Section 25/8 of the Companies Act 1956/2013 or under Indian Trusts Act 1882 and it fulfils the conditions mentioned in sub-section (5) of Section 80G of Income Tax Act.  Bal Raksha Bharat is registered under Societies Registration Act and has fulfilled the conditions of sub-section (5) of Section 80G of Income Tax Act.

Conclusion

Increasingly, Indians are becoming more socially-minded and willing to donate to NGO fundraising. International NGOs like Bal Raksha Bharat have set high benchmarks in ethics, transparency, and ability. It provides a substantial donation tax rebate to donors, as well as the satisfaction of having made a difference. It does this through its well-researched and executed programs that span cities, towns, and villages across India designed to bring children out of the circumstances of poverty, ill-health and exploitation through campaigns in nutrition, health care, relief and education, all while ensuring compliance with the 80G donation limit for tax benefits.

Join us in making a lasting impact!

FAQ’s

• How to claim a deduction for donation?
  

  To claim an income tax deduction for a donation, donate to an 80G-approved organisation, obtain a valid receipt and Form 10BE, and report the details under Schedule 80G while filing your Income Tax Return.

• How much can be claimed under 80G?
  

  The Income Tax Deduction for Donation under Section 80G can be 50% or 100% of the donated amount. Some donations are subject to a limit of 10% of adjusted gross total income.

• Who can claim a deduction under Section 80G?
  

  Donations under 80G can be claimed by Individuals, Hindu Undivided Families (HUFs), Companies, Partnership Firms, and Non-Resident Indians (NRIs), provided the donation is made to an eligible and approved organisation.

• Is 80G deduction available in the new tax regime?
  

  No, income tax deduction under Section 80G is not available if you opt for the new tax regime. This benefit can only be claimed under the old tax regime while filing your return.

• What is Form 10BE and why is it important?
  

  Form 10BE is a certificate issued by the donee organisation that reports your Donation under 80G to the Income Tax Department. It is mandatory to claim the Income Tax Deduction for Donation.

Soumi Halder

Manager-Program Campaign and Communication, Programme Support

“With over 20 years of dedicated experience in the social development sector, I am passionate about championing child rights and community empowerment through innovative communication strategies. I am Manager for Programme Campaigns and Communication with Bal Raksha Bharat (Save the Children)."