Section 80G: For Donor and Donee

Section 80G of the Income Tax Act provides benefits for both donor and donee, by making a donation taxpayer (donor) will get benefit by way of deduction from his Income, and by accepting the donation, trust (donee) will get benefit in respect of funds received for his welfare. In this post, we will discuss complete Section 80G of The Income Tax Act, 1961 in two parts-

  • one part is for donee and,
  • second part is for donor.

Section 80G of the Income Tax Act- Donee

What is Section 80G of the Income Tax Act

The Income Tax Act allows, deduction while calculating the total taxable Income to every assessee. One such deduction is allowed under section 80G of the Income Tax Act, 1961 for donations made to a charitable organization or a trust. Along with this, the deduction is also available for donation to specified political party, research organization, and electoral trust.

Who can claim deduction under section 80G

This deduction is not restricted to any specific category of person and it can be claimed by any taxpayers- whether resident or non-resident, whether Individual, company, firm, or any other person under the Act. Here are two things that need to remember-

  • The taxpayer must submit relevant proof of their contribution.
  • The contribution to the charitable organization must be made from one’s taxable income. Donation made from one’s non-taxable Income will not be considered for deductions.
  • Contribution made to trusts registered outside India are not eligible for tax deductions.

What mode of payment is allowed as a deduction under section 80G of the Income Tax Act

80G payment mode- The deduction under section 80G of the Income Tax Act, 1961 can only be claimed when payment is made via a cheque, draft, or in cash.

80G deduction if payment in cash- As per budget 2017, w.e.f FY 2017-18 onwards payment made in cash in excess of Rs. two thousand will not be eligible for deduction under section 80G of the Income Tax Act.

How to claim 80G Tax exemption

Proof of payment is of paramount importance when claiming deductions under section 80G of the Income Tax Act for charitable contributions. For a successful tax deduction, it needs to ensure that you must collect receipts of your donation from the charity you donated to, and the receipts must have the name of the donor and donee, amount donated, registration number of the charity, etc. For claiming 80G Tax Exemption the following details have to be submitted in your Income Tax Return.

  • Name of the donee
  • PAN number of the donee
  • Address of the donee
  • Amount of contribution made

Apart from the above form 58 is also essentials if a donor intended to claim a 100% deduction on a donation, without which their donation will not be eligible for 100% deduction.

What is the section 80G Deduction Limit?

80G deduction eligibility- The first thing to remember is that donations made to prescribed relief funds and charitable institutions are only eligible for deduction and not all donations made are eligible for 80G tax exemption.

80G deduction limit- The second thing to remember is that there is also limits of % on the amount of donation made i.e 100% or 50%, which can be claimed accordingly.

Section 80G of the Income Tax Act can be broadly classified under four categories as mentioned below-

  • Donation with 100% deduction (without any qualifying limit)
  • Donation with 100% deduction (Subjected to 10% of adjusted gross total income)
  • Donation with 50% deduction (without any qualifying limit)
  • Donation with 50% deduction (Subjected to 10% of adjusted gross total income)

80G deduction calculation points

Following points are relevant while calculating the 80G deduction for the qualifying amount.

What is the qualifying amount– Qualifying amount refers to 10% of Adjusted Total Income or the donation/contributions made (excluding the donation/contribution made for non-qualifying amount) whichever is less.

What is adjusted total income- It is very simple to calculate, It is gross total income (sum of income under all heads) excluding the following incomes-

  • Amount deductible under Sections 80CCC to 80U (but not Section 80G)
  • Exempt income 
  • Long-term capital gains 
  • Income referred to in Sections 115A, 115AB, 115AC, 115AD and 115D, relating to non-residents and foreign companies  

Donation with 100% deduction – without any qualifying limit

80G deduction list- Donee/Notified Funds80G Deduction Limit
National Defence Fund set up by the Central Government100%
Prime Minister’s National Relief Fund 100%
National Foundation for Communal Harmony 100%
An approved university/educational institution of National eminence 100%
Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district 100%
Fund set up by a State Government for the medical relief to the poor 100%
National Illness Assistance Fund 100%
National Blood Transfusion Council or to any State Blood Transfusion Council 100%
National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities 100%
National Sports Fund 100%
National Cultural Fund 100%
Fund for Technology Development and Application 100%
National Children’s Fund 100%
Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory 100%
The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996 100%
The Maharashtra Chief Minister’s Relief Fund during October 1, 1993, and October 6, 1993 100%
Chief Minister’s Earthquake Relief Fund, Maharashtra 100%
Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of the earthquake in Gujarat 100%
Any trust, institution, or fund to which Section 80G(5C) applies for providing relief to the victims of the earthquake in Gujarat (contribution made during January 26, 2001, and September 30, 2001) or 100%
Prime Minister’s Armenia Earthquake Relief Fund 100%
Africa (Public Contributions – India) Fund 100%
Swachh Bharat Kosh (applicable from FY 2014-15) 100%
Clean Ganga Fund (applicable from FY 2014-15) 100%
National Fund for Control of Drug Abuse (applicable from FY 2015-16) 100%

Donation with 100% deduction – Subjected to 10% of adjusted gross total income

80G deduction list- Donee/Notified Funds80G Deduction Limit
Donations to the government or any approved local authority, institution, or association to be utilized for the purpose of promoting family planning 100%
Donation by a Company to the Indian Olympic Association or to any other notified association or institution established in India for the development of infrastructure for sports and games in India, or the sponsorship of sports and games 100%

Donation with 50% deduction – without any qualifying limit

80G deduction list- Donee/Notified Funds80G Deduction Limit
Jawaharlal Nehru Memorial Fund50%
Prime Minister’s Drought Relief Fund50%
Indira Gandhi Memorial Trust50%
Rajiv Gandhi Foundation50%

Donation with 50% deduction – Subjected to 10% of adjusted gross total income

80G deduction list- Donee/Notified Funds80G Deduction Limit
Any other fund or any institution which satisfies the conditions mentioned in Section 80G(5) 50%
Government or any local authority, to be utilized for any charitable purpose other than the purpose of promoting family planning 50%
Any authority constituted in India for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or both 50%
Any corporation referred to in Section 10(26BB) for promoting the interest of the minority community 50%
For repairs or renovation of any notified temple, mosque, gurudwara, church, or other places. 50%

Section 80G of the Income Tax Act- Donor

Who is required to get registered u/s 80G of the Income Tax Act

Under section 80G trust or institution can seek registration and it does not apply to religious trusts or institutions. Whereas the scheme of exemption u/s 12A applies to both charitable as well as religious trusts.

Eligibility of section 80G registration

Not all NGOs or trusts are eligible for 80G certification. There are certain rules which need to be followed to obtain it. Here are some details under which the government can reject your claim for registration or say certificate u/s 80G.

1. Separation of Business & Charity:- As a non-profit organization, if the entity is involved in any business/financial transactions which do not account for donations alone, you might have to segregate it. If not, your 80G certification request will be rejected.

2. No Misuse: The donations received so far, towards the cause should not be misused on any account or used for any other purpose, even within the organization. A strict accounting is essential to show as proof.

3. No Religious Activity: Any NGO/Trust, which is operated as a part of an activity that involves religious preaching, or for a particular caste or creed is not eligible for 80G certification.

4. Proper Accounting: As mentioned earlier, the accounting books and all transactions should be kept as proof before applying for 80G. These documents will be scrutinized thoroughly before 80G certification is issued.

Documents required for registration u/s 80G

To get registered u/s 80G, the organization needs to submit Form 10G to the Jurisdictional Principal Commissioner or Commissioner of Income Tax (exemption) along with the following documents-

  • Registration Certificate and MOA/Trust Deed, 
  • No Objection Certificate (NOC) from the Landlord (where the registered office is situated), 
  • Copy of PAN card of the NGO, 
  • Address Proof, as in the copy of Electricity Bill/House tax Receipt/Water Bill, 
  • Proof of the welfare activities carried out & Progress Report since incorporation or else, last 3 years, 
  • List of governing body board of trustees members with their contact details 
  • The Statement of Accounts, Balance Sheet, Income Tax Return documents since incorporation or else, last 3 years, 
  • List and details of donors, such as their address and PAN, 
  • Copy of Registration u/s 12A or copy of notification issued under section 10(23)or section 10(23C).

Certificate under section 80G of the Income Tax Act

Scrutiny of Documents- On receipts of the application, The Principal Commissioner or Commissioner of Income Tax will scrutinize the form 10G and other documents submitted by the applicant. He may ask for some additional documents or any information.

Pass Order- After complete scrutiny, he may pass an order in writing registering the applicant under section 80G of the Income Tax Act. If not, he may reject the application. On approval, he will issue certificate u/s 80G.

Time Limit- The time limit by which The Principal Commissioner or Commissioner of Income Tax has to pass an order, of either approval or rejection, shall not exceed 6 months from the end of the month in which such application was made.

Online apply for regitration under Section 80G of the Income Tax Act

Now the question is can we apply online for 80G registration. The answer to this question is ‘yes.

80G Registration online- As we discussed above for 80G registration, form 10G with supporting documents need to be submitted to the Jurisdictional Principal Commissioner or Commissioner of Income Tax (exemption) and for 80G registration online all the same documents need to be submitted through the Income Tax Portal. The applicant needs to submit these documents by login in or registering at the portal.

Frequently Asked Questions

  1. What is section 80G of the Income Tax Act describe?

    The Income Tax Act allows, deduction while calculating the total taxable Income to every assessee. One such deduction is allowed under section 80G of the Income Tax Act, 1961 for donations made to a charitable organization or a trust. Along with this, the deduction is also available for donation to specified political party, research organization, and electoral trust.

    Section 80G of the Income Tax Act provides benefits for both donor and donee, by making a donation taxpayer (donor) will get benefit by way of deduction from his Income, and by accepting the donation, trust (donee) will get benefit in respect of funds received for his welfare.

  2. How is 80G deduction calculated?

    Section 80G of the Income Tax Act can be broadly classified under four categories as mentioned below-

    Donation with 100% deduction (without any qualifying limit)
    Donation with 100% deduction (Subjected to 10% of adjusted gross total income)
    Donation with 50% deduction (without any qualifying limit)
    Donation with 50% deduction (Subjected to 10% of adjusted gross total income)

    Following points are relevant while calculating the 80G deduction for the qualifying amount-

    Qualifying amount- Qualifying amount refers to 10% of Adjusted Total Income or the donation/contributions made (excluding the donation/contribution made for non-qualifying amount) whichever is less.

    Adjusted Total Income- It is very simple to calculate, It is gross total income (sum of income under all heads) excluding the following incomes-

    *Amount deductible under Sections 80CCC to 80U (but not Section 80G)
    *Exempt income 
    *Long-term capital gains 
    *Income referred to in Sections 115A, 115AB, 115AC, 115AD and 115D, relating to non-residents and foreign companies  

  3. Who can claim deduction u/s 80G?

    Section 80G deduction is not restricted to any specific category of person and it can be claimed by any taxpayers- whether resident or non-resident, whether Individual, company, firm, or any other person under the Act.

  4. Which donation is eligible for 100% deduction?

    Following donation are eligible for 100% deduction under section 80G of the Income Tax Act, 1961.

    National Defence Fund set up by the Central Government

    Prime Minister’s National Relief Fund

    National Foundation for Communal Harmon

    An approved university/educational institution of National eminence

    Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district

    Fund set up by a State Government for the medical relief to the poor 

    National Illness Assistance Fund 

    National Blood Transfusion Council or to any State Blood Transfusion Council 

    National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities 

    National Sports Fund 

    National Cultural Fund 

    Fund for Technology Development and Application 

    National Children’s Fund 

    Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory 

    The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central
    Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996 

    The Maharashtra Chief Minister’s Relief Fund during October 1, 1993, and October 6, 1993 

    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 earthquake in Gujarat 

    Any trust, institution, or fund to which Section 80G(5C) applies for providing relief to the victims of the earthquake in Gujarat (contribution made during January 26, 2001, and September 30, 2001) or 

    Prime Minister’s Armenia Earthquake Relief Fund 

    Africa (Public Contributions – India) Fund 

    Swachh Bharat Kosh (applicable from FY 2014-15) 

    Clean Ganga Fund (applicable from FY 2014-15) 

    National Fund for Control of Drug Abuse (applicable from FY 2015-16)

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Disclaimer: The information contained in the above article are solely for informational purpose after exercising due care. However, it does not constitute professional advice or a formal recommendation. The author does not own any responsibility for any loss or damage caused to any person, directly or indirectly, for any action taken on the basis of the above article.

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Compiled by- CA Chirag Agarwal (Practicing Chartered Accountants)

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