- Where an assessee pays any sum as donation to eligible funds or institutions, he is entitled to a deduction, subject to certain limitations, from the gross total income.
2.Quantum of deduction:
- There are four categories of deductions. You can check ‘Tax Exempted Entities‘. The following information gives the details of the institutions and funds to which donations can be made for the purpose of claiming deduction under section 80G,:
3.Donation qualifying for 100% deduction, without any qualifying limit
- The National Defence Fund set up by the Central Government
- Prime Minister’s National Relief Fund.
- Prime Minister’s Armenia Earthquake Relief Fund
- The Africa (Public Contributions-India) Fund
- The National Children’s Fund
- The National Foundation for Communal Harmony
- Approved University or educational institution of national eminence (8) Chief Minister’s Earthquake Relief Fund, Maharashtra
- Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of the Gujarat earthquake
- Any Zila Saksharta Samiti for primary education in villages and towns and for literacy and post-literacy activities
- National Blood Transfusion Council or any State Blood Transfusion Council whose sole objective is the control, supervision, regulation or encouragement of operation and requirements of blood banks
- Any State Government Fund set up to provide medical relief to the poor
- The Army Central Welfare Fund or Indian Naval Benevolent Fund or Air Force Central Welfare Fund established by the armed forces of the Union for the welfare of past and present members of such forces or their dependants.
- The Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
- The National Illness Assistance Fund
- The Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund in respect of any State or Union Territory
- The National Sports Fund set up by the Central Government
- The National Cultural Fund set up by the Central Government
- The Fund for Technology Development and Application set up by the Central Government
- National Trust for welfare of persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
- The Swachh Bharat Kosh, set up by the Central Government, other than the sum spent by the assessee in pursuance of CSR u/s 135(5) of the Companies Act, 2013
- The Clean Ganga Fund, set up by the Central Government, where such assessee is a resident, other than the sum spent in pursuance of CSR u/s 135(5) of the Companies Act, 2013
- The National Fund for Control of Drug Abuse constituted under section 7A of the Narcotic Drugs and Psychotroic Substances Act, 1985
4.Donation qualifying for 50% deduction, without any qualifying limit
- The Jawaharlal Nehru Memorial Fund
- Prime Minister’s Drought Relief Fund
- Indira Gandhi Memorial Trust
- Rajiv Gandhi Foundation
5.Donation qualifying for 100% deduction, subject to qualifying limit
- The Government or to any such local authority, institution or association as may be approved for promotion of family planning
- Sum paid by a company as donation to the Indian Olympic Association or any other association/institution established in India, as may be notified by the Government established for the development of infrastructure for sports or games, or – the sponsorship of sports and games in India
6.Donation qualifying for 50% deduction, subject to qualifying limit
- Any Institution or Fund established in India for charitable purposes fulfilling prescribed conditions under section 80G(5).
- The Government or any local authority for utilisation f or any charitable purpose other than the purpose of promoting family planning.
- An authority constituted in India by or under any other law enacted either for the purpose- of dealing with and satisfying the need for housing accommodation or – of planning, development or improvement of cities, towns and villages, or both.
- Any Corporation established by the Central Government or any State Government for promoting the interests of the members of a minority community as referred in section 10(26BB).
- for renovation or repair of any such temple, mosque, gurdwara, church or other place as notified by the Central Government to be of historic, archaeological or artistic importance or to be a place of public worship of renown throughout any State or States.
7.Qualifying limit for Section 80G:
The eligible donations referred to in 5th point and 6th point should be aggregated and the sum total should be limited to 10% of the adjusted gross total income. This would be the maximum permissible deduction. The donations qualifying for 100% deduction would be first adjusted from the maximum permissible deduction and thereafter 50% deduction of the balance would be allowed.
8.Steps for computation of qualifying limit for Section 80G
Step 1: Compute adjusted total income i.e., the GTI as reduced by the following:
- Deductions under Chapter VI-A, except under section 80G
- Short-term capital gain taxable under section 111A
- Long-term capital gains taxable under sections 112 & 112A
- Any income on which income-tax is not payable
- Income referred to in section 115A(1)(a), 115AB, 115AC,115AD and 115D
Step 2: Calculate 10% of adjusted total income
Step 3: Calculate the actual donation, which is subject to qualifying limit (Total of 5th point and 6th point donations, shown in the table above)
Step 4: Lower of Step 2 or Step 3 is the maximum permissible deduction.
Step 5: The said deduction is adjusted first against donations qualifying for 100% deduction (i.e., 5th point donations). Thereafter, 50% of balance qualifies for deduction under section 80G.
- Where an assessee has claimed and has been allowed any deduction under this section in respect of any amount of donation, the same amount will not qualify for deduction under any other provision of the Act for the same or any other assessment year.
- Donations in kind shall not qualify for deduction under section 80G.
- No deduction shall be allowed in respect of donation of any sum exceeding Rs.2,000 unless such sum is paid by any mode other than cash.
- The deduction under section 80G can be claimed whether it has any nexus with the business of the assessee or not.
- As per Circular No.2/2005 dated 12.1.2005, in cases where employees make donations to the Prime Minister’s National Relief Fund, the Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund through their respective employers, it is not possible for such funds to issue separate certificate to every such employee in respect of donations made to such funds as contributions made to these funds are in the form of a consolidated cheque. An employee who makes donations towards these funds is eligible to claim deduction under section 80G. It is, hereby, clarified that the claim in respect of such donations as indicated above will be admissible under section 80G on the basis of the certificate issued by the Drawing and Disbursing Officer (DDO)/Employer in this behalf.