Section 80G of the Income Tax Act | Tax Deductions for Donations

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Section 80G

1. Introduction

Any assessee who has paid any sum by way of donation is eligible to claim deduction under this provision to the extent of 50% to 100% of the donation made. For certain donations, the deduction is limited to 10% of the adjusted gross total income. Any donation in cash in excess of Rs. 2,000 shall not be allowable as deduction.

2. About

1.1 Who can claim this deduction?

Every assessee (resident or non-resident) who has paid any sum as donation to the prescribed funds, institutions or associations, etc. is eligible to claim deduction under this provision. The deduction is available under this provision even if the donations is made out of savings or out of exempt income[1].

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1.2 How much deduction can be claimed?

Deduction under this provision is allowed in accordance with following:

(a) 100% deduction without maximum limit

(b) 50% deduction without maximum limit

(c) 100% deduction subject to maximum limit

(d) 50% deduction subject to maximum limit

The funds or institutions eligible to allow deduction under this provision are specified in the below table.

Donee Subject to maximum limit % of donation allowed as deduction
Popular Funds or Institutions

(a) National Defence Fund

 – 100%

(b) PM National Relief Fund

 – 100%

(c) PM Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND)[2]

 – 100%

(d) National Children’s Fund

 – 100%

(e) CM Relief Fund or the Lieutenant Governor’s Relief Fund

 – 100%

(f) Zila Saksharta Samiti

 – 100%

(g) Army Central Welfare Fund

 – 100%

(h) Indian Naval Benevolent Fund

 – 100%

(i) Air Force Central Welfare Fund

 – 100%

(j) Andhra Pradesh CM Cyclone Relief Fund

 – 100%

(k) National Sports Fund

 – 100%

(l) National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities

 – 100%

(m) Swachh Bharat Kosh[3] (not being in pursuance of CSR)

 – 100%

(n) Clean Ganga Fund (not being in pursuance of CSR)[3]

 – 100% (to resident assessee only)

(o) National Fund for Control of Drug Abuse

 – 100%

(p) Jawaharlal Nehru Memorial Fund

 – 50%

(q) PM Drought Relief Fund

 – 50%

(r) Indira Gandhi Memorial Trust

 – 50%

(s) Rajiv Gandhi Foundation

 – 50%

(t) Notified temple, mosque, gurudwara, church or other place (for repairs or renovation)

 Yes [Note 1] 50%

(u) Shri Ram Janambhoomi Teerth Kshetra[4]

 Yes [Note 1] 50%
Other Funds or Institutions

(a) National Illness Assistance Fund

 – 100%

(b) National Blood Transfusion Council or State Blood Transfusion Council

 – 100%

(c) Fund set up by a State Government for the medical relief to the poor

 – 100%

(d) National Cultural Fund

 – 100%

(e) Fund for Technology Development and Application

 – 100%

(f) National Foundation for Communal Harmony

 – 100%

(g) PM Armenia Earthquake Relief Fund

 – 100%

(h) Africa (Public Contributions – India) Fund

 – 100%

(i) CM Earthquake Relief Fund, Maharashtra

 – 100%

(j) An university or educational institution of National eminence approved by the tax authorities

 – 100%

(k) Fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat.

 – 100%

(l) Family Planning Association of India/Red Cross Society of India[5]

 Yes [Note 1] 100%

(m) Government or any approved local authority, institution or association to be utilised for the purpose of promoting family planning.

 Yes [Note 1] 100%

(v) Indian Olympic Association or to any other notified association or institution established in India for the development of infrastructure for sports and games in India or the sponsorship of sports and games in India

 Yes [Note 1] 100% (to company assessee only)

(w) Government or any local authority to be utilised for any charitable purpose other than the purpose of promoting family planning

 Yes [Note 1] 50%

(x) Any corporation specified in Section 10(26BB) for promoting interest of minority community

 Yes [Note 1] 50%

(y) Any authority constituted in India either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or both.

 Yes [Note 1] 50%

(z) Any other fund or any institution fulfilling the conditions as specified in Section 80G(5).

 Yes [Note 1] 50%

Note 1: Where aggregate of the amount donated, to the funds or institutes specified above, exceeds 10% of the adjusted gross total income, then the amount in excess of such 10% shall not be eligible for deduction.

The adjusted gross total Income shall be computed in the manner explained in below table.

Particular Amount
Gross total income xxx
Less:

(a) Amount deductible under Section 80C to 80U (Except Section 80G)

 xxx

(b) Share of profit in AOP eligible for rebate under Section 86

 xxx

(c) Long term capital gains

 xxx

(d) Short-term capital gain arising from securities specified under Section 111A

 xxx

(e) Any income referred to in Sections 115A, 115AB, 115AC, 115ACA, 115AD and 115D.

 xxx
Adjusted Gross total Income xxx

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Example, Mr X contributed Rs. 100,000 to Shri Ram Janambhoomi Teerth Kshetra. He also made an investment of Rs. 100,000 which are deductible under section 80C. His total income during the financial year is Rs. 12,20,000 including following:

Nature of income Amount
Long-term capital gain from transfer of GDR as referred to in Section 115ACA 500,000
Short-term capital gain taxable under section 111A 200,000

Deduction under Section 80G shall be computed in the following manner:

Particulars Amount
Gross total Income 12,20,000
Less:
(a) Deduction under Section 80C 100,000
(b) Short-term capital gains taxable under section 111A 200,000
(c) Long-term capital gains taxable under section 115ACA 500,000
Adjusted gross total Income [A] 420,000
10% of adjusted gross total Income [B = A * 10%] 42,000
Amount of Donation [C] 1,00,000
Qualifying amount for deduction [D = Lower of B and C] 42,000
Deduction allowable under Section 80G [E = 50% of D] 21,000

Example, Mr Y contributed Rs. 50,000 to Shri Mata Vaishno Devi Shrine Board during the financial year. His gross total income during the year is as follows:

Particulars Amount
Long term capital gain 600,000
Short term capital gain taxable under section 111A 15,00,000
Gross total income 21,00,000

Deduction under Section 80G shall be computed in the following manner:

Particulars Amount
Gross total Income 21,00,000
Less:
(a) Short-term capital gains taxable under section 111A 15,00,000
(b) Long-term capital gains taxable under section 115ACA 6,00,000
Adjusted gross total Income [A] –
10% of adjusted gross total Income [B = A * 10%] –
Amount of Donation [C] 50,000
Qualifying amount for deduction [D =Lower of B and C] Nil
Deduction allowable under Section 80G [E = 50% of D] Nil

1.3 Mode of donation

The deduction can be claimed for the donations made in cash as well as cheque. However, donations made in cash for an amount exceeding Rs. 2,000 are not eligible for deduction. No deduction is allowed under this provision for the donation made in kind.

1.4 Proof of payment

Main article: Approval of a fund or institution under Section 80G

Where the donation is made by a person to any other fund or institution, the donor is entitled for deduction under this provision only when the donee fund or institution complies with the conditions as specified under section 80G(5). One such condition is that the donee fund or institution shall be required to file a statement of donation to the Income-tax Department and it shall also be required to furnish a certificate of donation to the donor specifying the amount of donation received during the year. Such certificate shall be an evidence to substantiate the deduction claimed under this provision.

The claim for deduction in respect of the amount donated to a fund or institution shall be allowed on the basis of information relating to said donation furnished to the income-tax department.

1.5 How to check eligibility of donee?

The donation made to a fund or institution shall be allowed as deduction only if such fund or institution is either specified in the provision itself or notified by the tax authorities. A fund or institution is notified for deduction in accordance with Section 80G(5). The assessee should check the validity of the registration granted to the donee under Section 80G(5), which can also be verified from an utility provided by the Income-tax Dept.

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1.6 Restriction on double deduction

Where any amount has been claimed and allowed as a deduction under this provision, no deduction shall be allowed in respect of the same amount under any other provision.

There may be a case where a donation is paid wholly and exclusively for the purpose of business or profession and hence eligible for deduction as under Section 37(1). The same donation may also qualify for deduction under Section 80G. Then it is at the option of the assessee to claim the expenditure either as a business expense under Section 37(1) or as deduction for donation under Section 80G but not under both. An assessee may exercise the option most beneficial to him but cannot claim the benefit of the same donation under more than one provisions of the Act[7].

1.7 Donor’s right not affected on violations by donee

The deduction in respect of the donation made to an institution or fund, shall not be denied on any of the following grounds:

(a) After the donation has been made, income of such fund or institution has become taxable due to non-compliance with the provisions of Section 11, Section 12 or Section 12A; or

(b) Exemption under section 11 or section 12 is denied to such trust or institution under section 13(1)(c) in relation to income arising from investment made in concern referred under section 13(2)(h). However, such investment shall not exceed 5% of the capital of the concern in which such investment is made.

Further, the right of the donor to claim deduction for the donation made to an approved fund or institution cannot be denied on the grounds that the donee institution did not comply with the conditions of the approval[8].

1.8 Whether deduction available under Alternative Tax Regime?

Alternative tax regime Nature of assessee Whether deduction is available
Section 115BA Company Yes
Section 115BAA Company Yes
Section 115BAB Company Yes
Section 115BAC Individual or HUF No
Section 115BAD Co-operative Society No

References

  1. Letter : F. No. 45/313/66-ITJ(61), dated 2-12-1966.
  2. Inserted by Section 4(XII) of the Taxation and Other Laws (Relaxation and Amendment of certain provisions) Act, 2020, with effect from 01-04-2020.
  3. Donation to Swachh Bharat Kosh and Clean Ganga Fund is eligible for deduction only if the amount is not spent by the assessee in pursuance of Corporate Social responsibility (CSR) under Section 135 of the Companies Act, 2013.
  4. Notification S.O. 1434 (E), dated 8-5-2020.
  5. Letter No. W. 110421/1/77-C&G(FP), dated 11-1-1977.
  6. These requirements have been introduced by Section 33 of the Finance Act, 2020 with effect from 01-06-2020. However, its applicability has been subsequently postponed to 01-04-2021.
  7. Jaswant Trading Co. v. CIT [1995] 212 ITR 24 (Raj.)
  8. N. N. Desai Charitable Trust v. CIT [2000] 246 ITR 452 (Guj.).

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