Common mistakes people make while claiming tax deductions on donations in india

26/02/26

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The main benefits of giving money to charitable foundations are social interaction and children’s welfare in India. Besides the above, donations have a significant long-term impact on health care, education, and other social issues, including the aforementioned areas of nutrition, protection, inclusion, and resilience, as well as disaster relief and emergency preparedness. This is not all; donations can be a source of tax relief under the Income Tax Act of 1961, besides their social value.

However, more often than not, the good intentions of donors may not result in tax deductions at the end of the year due to the common mistakes that occur during the donation or tax filing process. Lack of knowledge about the eligibility criteria, documentary requirements, or reporting procedures under Section 80G of the Income Tax Act causes these errors.

At Bal Raksha Bharat (also called Save the Children India), we believe that informed giving builds a chain of transparency, accountability, and durable impact. Getting to know about the tax deductions will not only help the donors to make compliant contributions but will also facilitate the movement of funds to the right organisations, which are engaged in welfare activities for children.

Common Mistakes and How to Avoid Them

Tax benefits are lost by a lot of donors due to various mistakes that could have been prevented, such as lack of proper documentation, donations to ineligible organisations, and wrong reporting. Awareness of Section 80G rules helps maintain the tax-compliance and impact of donations.

Not Donating to the Registered and Eligible Organisations

One of the major mistakes that donors usually make is to give money to organisations that are not registered or not approved under Section 80G of the Income Tax Act. It is only those donations which are given to eligible and government-approved charitable organisations that are entitled to a tax deduction.

Therefore, before donating, it is necessary to check whether. Responsible giving begins with due diligence.

How to Avoid:

Ensure the credibility of the NGO offering Section 80G deduction by obtaining its 80G certificate, checking its official websites, or getting its PAN details before contributing any donations.

Missing or Incorrect Donation Receipts

Donation receipts serve as mandatory proof when claiming tax deductions. Many donors either fail to obtain proper receipts or receive incomplete documentation, which can result in the rejection of deduction claims during tax assessment.

A valid Section 80G receipt should clearly include the following details:

• Name of the donor
• Name of the organisation
• Section 80G registration number
• Donation amount
• Date of contribution

Digital receipts are acceptable, provided all required information is clearly mentioned. One of the frequent causes for rejection of deductions is receipts that are incomplete, inaccurate, or not clear.

How to Avoid:

Ensure you receive a valid Section 80G receipt containing all mandatory details. There is no better way to manage your money than to ensure all of the tax-deductible expenses are documented and backed by acceptable proof.

Donating in Cash Above the Permissible Limit

Under the existing taxation law, subsection 80G disposes of an exemption leading to sums received in cash exceeding Rs. 2000 as an expenditure. This rule is clear, but a lot of contributors still make cash donations, which are above the limit, and hence, they lose the benefit of tax exemption.

For the safe side, any form of donation should be given through ways that can be tracked and verified, such as bank transfers, cheques, UPI, or other acknowledged digital platforms. These payment methods not only enhance transparency but also simplify documentation during the tax filing process.

Using non-cash payment methods strengthens accountability and supports a more transparent charitable ecosystem.

How to Avoid:

Do not make cash contributions over ₹2,000. For the purpose of getting tax deductions, make use of payment methods that can be traced, such as bank transfers, cheques, UPI, or digital wallets.

Assuming All Donations Qualify for Tax Deduction

Another myth that is very commonly held is that all types of donations will receive tax benefits. The truth is that under Section 80G, only specific kinds of cash donations to approved non-governmental organisations are eligible for tax exemption.

The donations that are made to individuals, the donations of goods, silent donations, or the purchases that are considered partly charitable are not likely to be deducted. In addition, the rate at which a donation can be deducted varies with the type and category of the NGO.

Some organisations can eliminate their entire taxable income, but there are also others that can only get a deduction of half the income, even if they fulfil the qualifying limits. These differences are very significant for being able to do tax planning and losing nothing through tax non-compliance.

How to Avoid:

Get a comprehensive idea of the types of donations that are eligible under Section 80G. Ensure that you give cash only to the NGOs that are certified, and also check the deduction percentages that apply before you do your tax planning.

Incorrect Calculation of Deduction Amount

Miscalculating the deductible amount is another frequent error. In accordance with Section 80G, some donations are allowed a qualifying limit of 10% of adjusted gross total income, while others are not included in this limit at all. The use of the wrong deduction percentage or income limits can result in incorrect claims, which may subsequently be adjusted or rejected during the assessment made by the tax authorities.

How to Avoid:

Please make a donation to check if it falls under the deduction category of 100% or 50%, and whether qualifying maximums apply. Refer to Section 80G rules or consult a tax expert if needed.

Failure to Report Donations While Filing Income Tax Returns

It frequently occurs that a considerable number of individuals do not report the donations under the correct section, even when donations are correctly made, and valid receipts are available. The information about the donations has to be accurately reported and filled in the Section 80G schedule of the return.

 There might be cases when additional documents or confirmation particulars will be required . Tax deductions will only go through if proper reporting, exact data entry, and diligent verification of the submitted information are adhered to. Claiming deductions during the tax filing season requires meticulousness in detail, as it is the factor that will determine the success of the claimed deduction.

How to Avoid:

Accurately enter donation details in the Section 80G schedule while filing returns. Cross-check PAN numbers, amounts, and receipts to avoid errors or claim rejection.

Donating Without Understanding Section 80G Rules

The unawareness of Section 80G continues to be one of the main factors for the donors not taking advantage of the tax benefits. This section explains:

1. Eligible organisations
2. Approved payment modes
3. Applicable deduction percentages
4. Documentation requirements

To the point of accurately reporting the information concerning the donation and including it in the Section 80G schedule of the return, this is indeed a very essential aspect of the taxation process that gets sometimes overlooked. It may also happen that additional documents need to be requested or that confirmation details will have to be provided.

How to Avoid:

Get to know the provisions of Section 80G, covering the categories of organisations entitled to receive donations, modes of payment, deduction limits, and reporting requirements, to make donations that are compliant and tax-efficient.

How to Claim Tax Deductions on Donations Correctly

To ensure that the claims are filed correctly and successfully, the donors need to follow the practices below:
First, the organisation needs to be verified to see if it has Section 80G registration or not.

• Donors should get and keep Full and accurate Receipts of their Donations.
• For donations over ₹2,000, pay only via bank transfers.
• Confirm the deduction percentage and limits that apply.
• During the Income Tax Return filing, report donation details accurately.

Having good organisation of documents and tax provisions can greatly reduce errors and ensure compliance.

Why You Should Donate to an NGO?

Giving money to a non-profit organisation (NGO) allows people not only to participate in social development in a big way but also to help such causes as education, health care, child protection, and disaster relief, among others, at the same time. It is the NGOs that work right in the communities to address the root causes and, thus, facilitate a lasting change. Not only social impact, but contributions to non-profits also come with the tax advantage under Section 80G, which makes giving both meaningful and money-saving. Strengthening trustworthy NGOs means that there will be more accountability, transparency, and long-term building up of the nation.

Conclusion

Making tax deductions on donations does not necessarily need to be a difficult process. With the right knowledge, proper documentation, and strict following of Section 80G rules, donors can make their donations both powerful and tax-efficient.

Since 2004, Bal Raksha Bharat has been implementing more than 60 child welfare programmes in India, covering all aspects such as education, healthcare, nutrition, protection, and inclusion, thereby strengthening child welfare across India. Our interventions have positively impacted 10 million children,n and we already foresee a great need for good and informed giving in the process of producing sustainable changes.

The combination of awareness, preparation, and compliance maximises the benefits to the donors and, at the same time, makes the donations more substantial, which leads to India’s long-term development. Informed giving not only consolidates personal tax planning but also facilitates the establishment of a fairer and stronger society for the children around the country.

Naveen Kumar

“Naveen is an SEO expert and digital marketing analyst at Bal Raksha Bharat with a passion for helping businesses grow online. With a data-driven approach, he specializes in boosting search rankings, driving traffic, and optimizing digital strategies. Follow for tips on SEO, content, and marketing trends."