How to save tax by donation in india (section 80g guide)

06/07/17

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How to Save Tax by Donation in India for FY 2025-26

Your income tax is an important deduction for the Indian government to invest in infrastructure, utilities, and aid at times of need. At the same time, the government has enabled Indian citizens to reduce the total tax burden through legally accepted means. No matter how far the income tax season is, you must begin on better tax planning as soon as possible, to best use these facilities. The Income Tax Act (1961) offers tax benefits of donating to charity to anyone who makes donations to charitable organisations under Section 80G tax exemption. Here is what you must know about donations to save tax.

1. Choose the Right Tax Regime for Donation Benefits

Before you decide to donate for tax saving, check whether you are filing under the old regime or the new regime. As per the rules, Section 80G deduction is not available when opting for the new tax regime (Section 115BAC). So, if you want to save tax by donation in India, start by comparing your tax outgo under both regimes and then make a final call.

Pro Tip: If you choose the old regime, keep the donation proof handy to claim it correctly under Schedule 80G when filing tax returns.

2. Verify Eligibility: 50% vs 100% Tax Deductions Under Section 80G

Not every donation fetches similar tax benefits. Under Section 80G, all donations made come under four buckets namely:

• 100% deduction (without limit)
• 50% deduction (without limit)
• 100% deduction (subject to qualifying limit)
• 50% deduction (subject to qualifying limit)

Under the “subject to limit” categories, deductions are restricted to 10% of the Adjusted Gross Total Income. So, always confirm the donee’s 80G status and deduction category before donating.

3. Eligible Modes of Donation: Cash Limits and Digital Preferences

Before you donate to save tax in India, let’s understand the Tax Deduction Guidelines for 35 AC or 80G Certificates.

• Maximum Deduction Limit: Tax deduction under Section 35AC or 80G is capped at ₹10,000.
• Tax Certificate Required: A tax certificate will be issued and must be submitted with your income tax return.
• Acceptable Payment Methods: Only donations made through the following modes are eligible for tax exemption:
  • Cheque
  • Cash
  • Online transfers
• Non-Qualifying Donations: Donations in kind (such as food, medicine, clothing, etc.) do not qualify for tax deduction.

Funds Eligible for 100% Deduction

• National Defence Fund set up by the Central Government
• Prime Minister’s National Relief Fund
• Fund set up by a State Government for the medical relief of the poor
• National Illness Assistance Fund
• National Blood Transfusion Council or any State Blood Transfusion Council
• National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
• National Sports Fund, National Cultural Fund, and National Children’s Fund
• Fund for Technology Development and Application
• Swachh Bharat Kosh (applicable from FY 2014–15)
• Clean Ganga Fund (applicable from FY 2014–15)

Donations Eligible for 50% Deduction

All approved NGOs and charitable institutions qualify for 50% tax deduction. However, some deductions may be with or without qualifying limits, depending on the organization’s category. So, before donating to save tax, you must request the following documents from the organization:

• 80G registration details
• Form 10BE

Further, when filing your ITR, ensure that your entry matches the donee’s filed details (Form 10BD). This will help avoid unnecessary claim issues.

Eligible Modes of Donation: Cash Limits and Digital Preferences

To save tax by donation, the contributions must be a monetary donation (goods/services or in-kind donations like food, clothing, or medicine are not eligible for tax deduction). Also, any cash donation above ₹2,000 is not eligible for 80G deduction. So, prefer using digital modes/cheque/demand draft for higher amounts.

4. How to Donate and Claim Tax Benefits

Here’s a checklist to help you plan and donate to save tax in India step-by-step and avoid errors when filing returns.

Step 1: Confirm 80G eligibility for the donee

Check whether the donee is approved under Section 80G and find out whether your donation is 50% or 100%, with or without limits.

Step 2: Donate via the right mode

Avoid cash donations above ₹2,000 and always use online/cheque/demand draft for higher amounts.

Step 3: Collect your documents

You need to collect the following two documents for filing your return:

• The donation receipt with clearly mentioned details such as donee name, address, PAN, 80G registration details, donation amount, etc.
• Form 10BE (Donation Certificate) from the donee, wherever applicable.

Step 4: File ITR and claim in Schedule 80G

Follow the steps below to file your return and claim tax savings under Schedule 80G

• Navigate to “Deductions under Chapter VI-A”.
• Select Section 80G.
• Enter the donee details and donation amount.
• Check if your claim matches the donee’s filing.

Note: The Income Tax Department can always verify your claim against the donee’s Form 10BD filing. So, be careful and avoid any mismatch.

How A Small Donation Can Help You Save Tax?

Every rupee matters as it goes towards well-researched programs that can generate long-term change across communities. NGOs like Bal Raksha Bharat have decades of experience in fundraising and generating value from financial donations to fight hunger, poverty, illiteracy and child exploitation. Tax exemption for donation to registered organisations and charities is available to Indian residents, Non-Resident Indians, Hindu Undivided Family, or companies.

How Does An Ngo Qualify For Income Tax Exemption?

An NGO must fulfil certain criteria to receive tax-exempt donations. These include formal registration under the Societies Registration Act 1860 or as a Section 8 company under the Companies Act, 2013 (earlier referred to as Section 25 under the Companies Act, 1956). For donors, the organisation/fund must be registered/approved under Section 80G and should be eligible to issue the required donation certificate/details for a claim. All transactions must be clearly recorded in its books of accounts transparently.

Conclusion – Donate To Save Tax

India is becoming more cognizant of the power of NGOs in making a difference to society. This is leading more kind-hearted citizens to invest more time in identifying organisations to contribute to. That’s where child protection NGOs like Bal Raksha Bharat are entrusted by stakeholders for high standards of ethics, transparency, and ability.

Bal Raksha Bharat brings tens thousands of children out of poverty, ill health and exploitation every year. Contributors to the NGO receive a substantial donation rebate in income tax, and the satisfaction of knowing that they will generate the highest return on social investment. If you plan on donating to save tax in India, we recommend you plan early, pick the correct tax regime, always donate through eligible modes, and keep all documents handy for a hassle free 80G claim.

FAQ’s

Is there a minimum donation amount for tax benefits?

No, there’s no fixed “minimum donation amount” under Section 80G to claim tax benefits. However, you must have a valid donation proof (receipt and details like donee PAN/registration). Any donation by cash above ₹2,000 doesn’t qualify. So, use payments apps, cheque, and demand draft for higher amounts.

Can I claim tax saving on in-kind donations?

No! Section 80G deduction is only meant for monetary donations. Any other in-kind donations like food, clothes, or medicines does not qualify for 80G tax deduction when filing your tax return.

How does the new tax regime affect 80G deductions?

For anyone opting for the new tax regime under section 115BAC, deduction cannot be claimed under Section 80G. So, to save tax by donation in India, select the old tax regime, fulfill all conditions and keep necessary documents handy.

Are donations to Bal Raksha Bharat eligible under 80G?

Yes! Donations made towards Bal Raksha Bharat are tax-exempt under Section 80G. To claim your tax benefits smoothly, we encourage that you donate via eligible modes, mention your PAN details wherever required, and keep all documents handy (including donation receipt/Form 10BE) during your ITR filing.

Gaurav Sharma

Content Reviewer

“I am an editor and technical specialist at Bal Raksha Bharat, responsible for publishing articles and posts. My role involves evaluating content for consistency, and ensuring a positive user experience across the website."