Deduction u/s 80G
Section 80G of the Income Tax Act, 1961 allows a deduction from the total income of a taxpayer for donations made to certain funds, charitable institutions, or relief efforts. This encourages people to contribute to the welfare of society while receiving tax benefits.
Eligibility for Deduction
- All individuals, Hindu Undivided Families (HUFs), firms, companies, and other taxpayers can claim this deduction.
- The donation must be made through a cheque, draft, or digital payment to be eligible. Cash donations are allowed only up to ₹2,000.
Types of Donations under Section 80G
Donations are categorized into four groups based on the extent of deduction allowed:
1. 100% Deduction Without Limit
- Prime Minister’s National Relief Fund
- National Defence Fund
- PM CARES Fund
- Swachh Bharat Kosh
2. 50% Deduction Without Limit
- Jawaharlal Nehru Memorial Fund
- Prime Minister’s Drought Relief Fund
3. 100% Deduction Subject to 10% of Adjusted Gross Total Income
- Donations to government or approved institutions for family planning
4. 50% Deduction Subject to 10% of Adjusted Gross Total Income
- Donations to charitable trusts and institutions not covered above
Adjusted Gross Total Income
It is the income before claiming 80G but after deductions under Sections 80C to 80U (excluding 80G). The limit of 10% is applied to this adjusted income wherever applicable.
Documents Required
- Donation receipt with the name and PAN of the trust/organization
- Registration number under 80G issued by the Income Tax Department
Conclusion
Section 80G offers taxpayers a valuable opportunity to reduce their tax burden while contributing to social and charitable causes. It’s important to keep proper documentation and ensure donations are made to eligible institutions.