Understanding Section 80G of the Income Tax Act for Charitable Donations
- knp gst
- Dec 31, 2025
- 4 min read
Making charitable donations is a meaningful way to support causes that matter. Beyond the goodwill, the Indian Income Tax Act offers a financial incentive for donors through Section 80G. This section allows taxpayers to claim deductions on donations made to certain funds and charitable institutions, reducing their taxable income. Understanding how Section 80G works can help donors maximize their tax benefits while contributing to society.
What is Section 80G?
Section 80G of the Income Tax Act, 1961, provides tax deductions for donations made to specific funds and charitable organizations. When you donate to eligible institutions, you can claim a deduction from your gross total income, lowering your tax liability.
The section outlines:
Which donations qualify for deductions
How much deduction you can claim
Limits on deductions for certain donations
Eligibility criteria for institutions receiving donations
This framework encourages philanthropy by offering financial relief to donors.
How Much Deduction Can You Claim?
Section 80G specifies two main deduction rates depending on the type of fund or institution:
Donations including special funds
If your donation includes contributions to "special funds" listed under subsection 2, you get:
100% deduction on donations to these special funds
50% deduction on donations to other eligible funds
50% deduction on the total donation amount
Donations only to other eligible funds
If your donations are only to eligible funds other than the special ones, you get:
Example
Suppose you donate ₹10,000, where ₹4,000 goes to a special fund (like the National Defence Fund) and ₹6,000 to another approved charity. Your deduction will be:
100% of ₹4,000 = ₹4,000
50% of ₹6,000 = ₹3,000
Total deduction = ₹7,000
This calculation helps you understand how much of your donation reduces your taxable income.
Which Donations Qualify for Deduction?
Section 80G contains a detailed list of funds and institutions eligible for deductions. These are categorized mainly under subsection (2):
(a) Main List of Funds and Institutions
(i) to (iiihm): Specific Government and National Funds
Examples include:
- National Defence Fund
- Prime Minister’s Relief Fund
- Clean Ganga Fund
Donations to these funds get 100% deduction without any limit.
Memorial Funds
Donations to funds like Nehru Memorial, Indira Gandhi Memorial, and Rajiv Gandhi Memorial qualify for 50% deduction without limit.
Other Approved Funds and Institutions
Charitable organizations approved by the government fall here, eligible for deductions but subject to limits.
Government or Local Authorities for Charitable Purposes
Donations to these bodies also qualify.
Housing and Urban Development Authorities
Special Corporations under Section 10(26BB)
Government or Approved Bodies for Family Planning
(b) Donations for Renovation of Notified Religious Places
Donations made for renovating religious places of historic or archaeological importance qualify for deductions.
(c) Donations by Companies for Sports Infrastructure and Sponsorship
Companies donating for sports infrastructure development or sponsorship can claim deductions under this clause.
(d) Donations for Gujarat Earthquake Relief
This applies only for donations made during a specific period related to Gujarat earthquake relief efforts.
Limits on Deductions
Section 80G sets a maximum limit on deductions for certain donations. For donations under clauses (a)(iv), (a)(v), (a)(vi), (a)(via), (a)(vii), (b), and (c), the total deduction is capped at 10% of the donor’s adjusted gross total income.
Any amount donated beyond this 10% limit will not be considered for deduction.
Practical Impact
If your adjusted gross total income is ₹10,00,000, the maximum deduction you can claim for donations under these categories is ₹1,00,000. Donations exceeding this amount will not reduce your taxable income further.
Eligibility Conditions for Institutions
To qualify for deductions under Section 80G, institutions must meet certain conditions. The Act lists nine eligibility criteria that institutions must satisfy, including:
Being established for charitable purposes
Not distributing profits to members
Maintaining proper accounts and audit reports
Using donations only for approved charitable activities
These conditions ensure that only genuine organizations benefit from tax exemptions, protecting donors and the government.
How to Claim Deduction Under Section 80G
To claim deductions, donors should:
Obtain a receipt from the institution with its registration number under Section 80G.
Ensure the receipt contains the donor’s name, amount donated, and date of donation.
Keep the receipt safely for filing income tax returns.
Declare the donation amount in the income tax return under the appropriate section.
Common Questions About Section 80G
Can I claim deduction for donations made in cash?
Donations above ₹2,000 made in cash are not eligible for deduction. It is advisable to donate via cheque, bank transfer, or digital payment methods to claim deductions.
Are all charitable donations eligible for Section 80G?
No. Only donations to funds and institutions approved under Section 80G qualify. Donations to political parties or individuals do not qualify.
Does the deduction reduce my taxable income or tax payable?
The deduction reduces your taxable income, which in turn lowers the tax payable based on your tax slab.
Can companies claim deductions under Section 80G?
Yes, companies can claim deductions for donations made to eligible funds and institutions, subject to the limits and conditions specified.
Understanding Section 80G helps donors make informed decisions about their charitable contributions. By knowing which donations qualify and how much deduction you can claim, you can support causes you care about while benefiting from tax relief.
If you plan to donate this year, check whether the institution is registered under Section 80G and keep all receipts. This simple step ensures you get the maximum benefit allowed by law.
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