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80G : Donations to Charitable Trust or Government Bodies

Updated: Dec 26, 2023

80G Donation Deduction in Income Tax

Section 80G of the Income Tax Act provides a valuable opportunity for taxpayers to contribute to charitable causes while reducing their tax burden. However, it's important to understand the changes and complexities involved to claim the maximum benefit. Here's an updated blog post on 80G deductions for all assessees:


Categories of Deductions:

There are four categories of deductions under Section 80G, each with its own limitations and qualifying criteria:


Category I - 100% Deduction Without Qualifying Limit

This category includes donations to specific funds and institutions like the Prime Minister's National Relief Fund, National Children's Fund, Swachh Bharat Kosh, National Defence Fund, and PM CARES Fund.


Category II - 50% Deduction without Qualifying Limit

Donations to the Prime Minister's Drought Relief Fund fall under this category.


Category III - 100% deduction subject to qualifying limit

This category applies to donations made to government or local institutions for promoting family planning, authorized bodies for scientific research or rural development, and certain notified temples, churches, gurudwaras, mosques, etc. You can check list of notified place of worships here https://incometaxindia.gov.in/Pages/utilities/Notified-Place-of-Worship.aspx.


Category IV - 50% deduction subject to qualifying limit : Donations to government or local authorities for charitable purposes other than promoting family planning and notified places of worship fall under this category. List of eligible institutes can be checked here https://incometaxindia.gov.in/Pages/utilities/exempted-institutions.aspx



Qualifying Limit Calculation:


Here's how to calculate the qualifying limit for deductions in Categories III and IV:

  1. Adjusted Total Income: Calculate your gross total income after reducing deductions under Chapter VI-A (except 80G), Short-Term Capital Gains taxable under section 111A, and Long-Term Capital Gains taxable under sections 112 and 112A.

  2. 10% of Adjusted Total Income: Calculate 10% of your adjusted total income.

  3. Actual Donation: Determine the actual amount of donation subject to the qualifying limit.

  4. Lower of Step 2 or Step 3: This amount is the maximum permissible deduction.

  5. Deduction Adjustment: First, adjust the deduction against donations qualifying for 100% (Category III). Then, claim 50% of the remaining amount as a deduction under section 80G.


Important Notes:

● Donations exceeding ₹2,000 must be made through a non-cash mode to be eligible for deduction.

● Obtain a donation receipt from the charitable organization in the prescribed format.

● Claim the deduction only for the financial year in which the donation is made.

● File your income tax return with proof of donation to claim the deduction.


Deduction to Individuals of News Tax Regime or Companies Opting Out of 115BAA

Deductions under 80G are available only for individuals who file income tax returns as per the Old Tax Regime and companies who have not opted for reduced income tax rate u/s 115BAA.


Conclusion:

Understanding the intricacies of Section 80G deductions is crucial for maximizing your tax benefits while contributing to worthy causes.


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