Table of Contents

FAQs on Section 80G of the Income Tax Act, 1961

(NUDGE Campaign – Official Compilation)

Section 80G of the Income Tax Act, 1961 provides for deduction in computing the total income of an assessee in respect of donations made to certain funds, charitable institutions, trusts, and other specified entities. The provisions of this section aim to encourage charitable contributions by allowing deductions subject to prescribed conditions, limits, and verification mechanisms.

This document presents a comprehensive and structured explanation of Section 80G, based strictly on the FAQs and Annexure published on the official website of the Income Tax Department. The content covers the statutory framework, eligible donations, deduction categories, limits, procedural requirements, and filing-related aspects.

1. Statutory Structure of Section 80G

Section 80G is divided into various sub-sections, each dealing with a specific component of deduction on donations.

1.1 Section 80G(1): Amount of Deduction

Section 80G(1) provides the manner of computation of deduction. The deduction depends upon the nature of donations made.

Where donations include special funds specified in sub-section (2), the deduction shall be computed as follows:

One hundred percent deduction in respect of donations to specified special funds
Fifty percent deduction in respect of remaining eligible donations

Where donations are made only to other eligible funds or institutions, the deduction shall be limited to fifty percent of the total eligible donation amount.

1.2 Section 80G(2): Donations Eligible for Deduction

Section 80G(2) contains the comprehensive list of funds, institutions, and authorities to which donations qualify for deduction. These include:

(a) Funds and Institutions

This clause includes multiple sub-clauses covering:

Specific national and government funds such as the National Defence Fund, Prime Minister’s National Relief Fund, PM CARES Fund, Clean Ganga Fund, Swachh Bharat Kosh, and similar funds
Memorial funds such as Jawaharlal Nehru Memorial Fund, Indira Gandhi Memorial Trust, and Rajiv Gandhi Foundation
Other approved funds and institutions
Government or local authorities for charitable purposes
Housing and urban development authorities
Corporations referred to under section 10(26BB)
Government or approved bodies for family planning purposes

(b) Donations for Renovation or Repair

Donations made for renovation or repair of notified temples, mosques, gurdwaras, churches, or other places of historic, archaeological, or artistic importance or places of public worship of renown.

(c) Donations for Sports Infrastructure

Donations made by companies to the Indian Olympic Association or other notified institutions for development of sports infrastructure or sponsorship of sports and games in India.

(d) Donations for Gujarat Earthquake Relief

Donations made during the specified period for relief to victims of the Gujarat earthquake.

1.3 Section 80G(4): Maximum Deduction Limit

For certain categories of donations specified under clauses (a)(iv), (a)(v), (a)(vi), (a)(via), (a)(vii), (b), and (c) of sub-section (2), the aggregate deduction shall not exceed ten percent of the donor’s adjusted gross total income.

Any donation exceeding the said qualifying limit shall be ignored for deduction purposes.

1.4 Section 80G(5): Conditions for Eligibility of Institutions

To be eligible for approval under Section 80G, an institution or fund must satisfy the conditions prescribed under clauses (i) to (ix) of sub-section (5), which include:

Income of the institution must be exempt under Sections 11, 12, or 10(23AA) or 10(23C)
The instrument governing the institution must not permit use of income or assets for non-charitable purposes
The institution must not be established for the benefit of any particular religious community or caste
Proper books of account must be maintained
The institution must be duly registered as a trust, society, company, or university
Approval must be granted by the Principal Commissioner or Commissioner of Income Tax
Deeming provisions apply for institutions approved during specified earlier periods
Mandatory filing of prescribed statements with income-tax authorities
Issuance of donation certificates to donors

1.5 Section 80G(5A): Restriction on Multiple Deductions

Where a deduction has been allowed under Section 80G in respect of any donation, the same amount shall not be allowed as a deduction under any other provision of the Income Tax Act for the same or any other assessment year.

1.6 Section 80G(5D): Cash Donation Restriction

No deduction shall be allowed in respect of any donation exceeding two thousand rupees unless such donation is made by a mode other than cash. Acceptable modes include cheque, demand draft, or electronic modes of payment.

1.7 Section 80G(5E): Pending Applications

Applications for approval pending as on the specified date shall be treated as fresh applications under the amended provisions.

2. Explanations to Section 80G

Explanation 2A

Deduction claimed by the donor shall be verified on the basis of information furnished by the donee institution registered under Section 80G(5).

Explanation 3

Charitable purpose shall not include activities which are wholly or substantially religious in nature.

Explanation 4

Sports associations notified by the Central Government shall be deemed to be charitable institutions.

Explanation 5

Deduction under this section shall be allowed only in respect of monetary donations. Donations in kind shall not qualify.

3. Meaning of Donation and Deduction

A donation refers to the actual amount contributed by a person to an eligible fund or institution.
A deduction refers to the tax benefit allowed while computing taxable income in respect of such donation.

4. Donor and Donee

A donor is the person who makes the donation.
A donee is the eligible fund, trust, or institution receiving the donation.

5. Persons Eligible to Claim Deduction

Any taxpayer, including individuals, Hindu Undivided Families, firms, companies, or any other person having taxable income, may claim deduction under Section 80G subject to compliance with prescribed provisions.

6. Categories of Donations under Section 80G

Donations are classified into four categories:

One hundred percent deduction without qualifying limit
Fifty percent deduction without qualifying limit
One hundred percent deduction subject to qualifying limit
Fifty percent deduction subject to qualifying limit

7. Verification and Compliance Requirements

As per Rule 18AB of the Income Tax Rules, 1962, certain donees are required to file Form 10BD containing donor-wise details. Donors are required to obtain Form 10BE from the donee. Deduction shall be allowed only if the details furnished in the return of income match with Form 10BD filed by the donee.

8. Deduction under New Tax Regime

Deduction under Section 80G shall not be allowed where the assessee opts for taxation under Section 115BAC.

9. Filing of Schedule 80G in ITR

To claim deduction:

The assessee must select “Deductions under Chapter VI-A”
Enter details under Section 80G
Furnish donee particulars and donation amount

10. Carry Forward of Excess Donation

Any excess donation exceeding the qualifying limit shall not be carried forward for deduction in subsequent years.

11. Adjusted Gross Total Income

Adjusted Gross Total Income means gross total income reduced by:

Deductions under Sections 80C to 80U (excluding Section 80G)
Exempt income
Long-term capital gains
Short-term capital gains under Section 111A
Income referred to in Sections 115A, 115AB, 115AC, 115AD, and 115D

12. Annexure-1: Funds Eligible for 100% Deduction without Limit

The list of twenty-four funds eligible for one hundred percent deduction without any qualifying limit is as provided in Annexure-1 of the official notification and includes national defence, relief, welfare, health, education, environment, sports, and disaster relief funds.

The provisions of Section 80G prescribe a structured framework governing eligibility, limits, documentation, and verification of deductions in respect of donations. Taxpayers are required to ensure compliance with statutory conditions, payment modes, and reporting requirements while claiming deduction under this section.