Purpose and Scope

• Section 80G of the Income Tax Act provides deductions for donations made to approved funds, charitable institutions, and relief organizations.
  
• It encourages taxpayers to contribute to social, cultural, and national welfare activities.
  
• Deduction is available to individuals, companies, firms, and HUFs.
  
• Donations must be made to institutions approved under Section 80G by the Income Tax Department.
  
• Applicable under the old tax regime only.
  

Eligibility for Deduction

• Donation must be made via non-cash mode (cheque, demand draft, or digital payment).
  
• Cash donations are allowed only up to ₹2,000.
  
• Donations in kind (such as goods or services) are not eligible for deduction.
  
• The donor must retain a valid receipt, PAN of the trust, and Form 10BE from the donee organization.
  
• Deduction is allowed only if the taxpayer has taxable income.
  

Categories of Eligible Donations

• Donations are classified into four categories based on percentage of deduction and whether the amount is subject to a qualifying limit.
  
• Some donations qualify for 100% deduction without limit, such as donations to the Prime Minister’s National Relief Fund.
  
• Some qualify for 50% deduction without limit, like the Jawaharlal Nehru Memorial Fund.
  
• Others are subject to 100% or 50% deduction with a limit of 10% of adjusted gross total income.
  
• Any amount above the qualifying limit is not deductible.
  

Calculation of Deduction

• First, calculate the adjusted gross total income by removing deductions under Sections 80C to 80U (except 80G) and certain exemptions.
  
• Identify whether the donation falls under a restricted or unrestricted category.
  
• Apply the relevant deduction percentage: 100% or 50%.
  
• If under the 10% limit, restrict the donation amount accordingly.
  
• Claim the final deductible amount in the income tax return.
  

Important Compliance Requirements

• Donation must be made to institutions registered under Section 80G(5)(vi).
  
• Donee must issue a certificate Form 10BE with donation details and their 80G registration number.
  
• PAN of the donee organization is mandatory for claiming deduction.
  
• Donors should preserve all documents for assessment or scrutiny.
  
• E-filing is mandatory to claim this deduction with proper documentation.