Heard people enthusiastically talking about 80G and wonder what it means & how it operates? Well, 80G is nothing but a provision of the Income Tax act that helps you save money on tax when you make a donation for a certain charitable purpose. Section 80G of the Income Tax act allows you to donate to the trust/organization covered under section 12A or 12AA and avail tax exemption of the monetary amount you donate from your income. This step by the Indian government to encourage taxpayers to do deeds like a donation for a noble purpose has yielded significant results in recent years and the reason behind such success is simple. More people come forward to contribute towards making a better world when their generosity is appreciated and they get benefits like tax incentives at the same time.

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Eligibility Criteria for Deduction Under 80G

As for now, section 80G makes all taxpayers (irrespective of whether they’re individuals/companies/Hindu Undivided families) eligible to make donations out of their income to charitable trusts and claim the donated amount for a tax deduction under it. Even the people of Indian origin living abroad or in simple terms NRI (Non-Resident Indians) are covered under the ambit of section 80G, with the condition that they make monetary contributions only to the qualified institutions and funds. 

Organizations Permitted Under Section 80G

People who seek to get tax incentives under section 80G need to make sure that the organizations they’re donating to fall under the purview of this section because only such contributions are qualified for claiming the tax deduction. Organizations qualified for section 80G are required to get registered under section 12A of the Income Tax act. 

There are some exemptions as well where the donations made by individuals don’t come under section 80G. For eg, donations in the form of monetary assistance paid to foreign trusts and political parties are not covered under the ambit of this section, and hence can’t be used to claim a tax deduction. 

Types of Deductions Under Section 80G

Deductions based on donations made to eligible funds or organizations by the taxpayers can be classified under four different categories that we have discussed below:

• Donation eligible for 100% deduction without being subjected to any qualifying limit

Donations paid towards funds & organizations such as PMNRF (Prime Minister National Relief Fund), NDF (National Defense Fund), NFCH (National Foundation for Communal Harmony), etc. fall under this category and give donors 100% tax exemptions on their monetary assistance.

• Donation eligible for 50% deduction without being subjected to any qualifying limit

Entities who make donations to trusts such as PMDRF (Prime Minister’s Drought Relief Fund), NCF (National Children’s Fund), Rajiv Gandhi Foundation, etc can claim for 50% tax exemption on their monetary assistance. 

• Donation eligible for 100% deduction but subjected to 10% of adjusted gross total income

Donations in the form of financial assistance to the authorities with an aim to encourage family planning, or to IOA (Indian Olympic Association)/ organizations with the motto to develop sports infrastructure fall under this category. 

They are eligible for a 100% deduction but for that, the only condition they need to meet is that the donated amount can’t exceed 10% of the adjusted gross total income of the donors.  

Note: Donations that cross the given limit are rounded off to 10%.

• Donation eligible for 50% deduction but subjected to 10% of adjusted gross total income

Donations given to the local authorities or government for noble purposes are eligible for the 50% tax deduction under this category, provided that the donated amount doesn’t cross the limit, which is 10% of the donor’s adjusted gross income.

Read Our Blog: Donations Under Section 80G and 80GGA of Income Tax Act

Mode of Payments Qualified for Tax Exemption

• Donations must be in the form of cash or cheque to be eligible for the tax incentives under section 80G. 
• If any company deducts a part of its employees’ salaries with the purpose of donating it then the donation receipts should be on the name of that particular company. This will help employees to get the benefit of tax exemption. 

Documents Required to Claim Tax Deductions Under Section 80G

The very first thing you need is the receipt stamped and issued by the charitable trust to back your claim. The receipt of the donation should contain the following details:

• Name, address, PAN (Permanent Account Number), registration number of the trust under section 80G alongside the donor’s name, donated amount, and the mode of payment.  
• In case your donation comes under the category of 100% deduction, then the form 58 received from that particular trust is also mandatory. In absence of it, the claim for the 100% tax exemption will be denied. 

Tip: Form 58 contains information with respect to the amount authorized for the charitable project and the amount that was collected.

• A xerox copy of the trust’s 80G registration certificate. 

Procedure to Fill 80G Schedule

Download the 80G form

Visit the website of the Income Tax Department and download the 80G form from there. You can also get it from your nearest Income Tax office. 

Fill in the required information

• First provide the personal details required by the form such as your name, address, PAN (Permanent Account Number), etc.
• After that, enter the information of the organization/fund to which you’ve made the monetary contribution.
• Fill in the amount contributed by you to that particular charitable organization.
• Enter the mode of payment you used, such as cash or cheque.
• Attach a copy of the receipt issued to you by the charitable organization.
• Fill in the amount of tax deduction that you’re eligible to claim under section 80G. It can be easily calculated based on the type of deduction categories (mention-above) your donation falls into.  

Submit the Form

After filling out the form with all the required information and attaching all the necessary documents, submit it to the Income Tax Department.

Note: Make sure you double-check all the information & documents and ensure that there are no errors. 

Once you’ve submitted the 80G form, you’re all set to claim the tax deduction in your income tax return. 

Conclusion

“Be Kind whenever possible. It is always possible” a quote that urges us to be compassionate toward one another, especially in the recent times when the world order is in chaos due to covid and economic fall downs. With the 80G section of the Income Tax act, you can not only contribute towards making a progressive change in the society but also save yourself money on tax as a gesture of gratitude from the Indian government for your noble work.