Section 80G of the Income Tax Act allows for deductions from your taxable income when you make donations to certain approved charitable organizations and funds. This incentive aims to encourage philanthropy among taxpayers. Here is everything you need to know about claiming deductions under section 80G:

What is Section 80G

Section 80G is a provision under the Income Tax Act 1961 that offers tax exemptions to those who donate to certain approved charitable causes and organizations. Under this section, you can claim deductions up to 100% of the donated amount from your taxable income depending on the organization you donate to. This helps reduce your tax liability for that financial year.

Which Donations Qualify for 80G Deductions

Not all charitable contributions are eligible for tax benefits under section 80G. The donation should be made to an institution or fund that is approved and notified by the government to receive 80G deductions. These include:

  • Donations to government approved non-profit organizations like certain NGOs, foundations, charitable institutions, etc. Some temples, mosques, churches, gurdwaras also fall under approved recipients.
  • Donations to approved government funds like Prime Minister’s National Relief Fund, Prime Minister’s Drought Relief Fund, National Foundation for Communal Harmony, Swachh Bharat Kosh, Clean Ganga Fund, etc.
  • Contributions made to approved university or educational institute for research, etc.
  • Certain government approved public sector bodies and institutions.
  • Funds set up by the government to provide relief to the poor, like national defense fund, jungle clearance fund, indigent housing fund, etc.

The donation receipt must state that the NGO can accept donations qualifying for Section 80G.

What is the Maximum Limit for Claiming Deduction

There is no maximum limit for claiming tax deductions under section 80G. You can claim the full amount donated to approved charities or institutions as deduction under this section. However, the total amount of deduction cannot exceed your taxable income for that year. Any excess amount can be carried forward to subsequent years.

What is the Deduction Rate Under 80G

The available 80G deduction rate depends on the charitable organization you donate to:

  • 100% deduction for donations to government approved funds like PM Relief Fund, National Defense Fund, etc. No cap on the maximum limit.
  • 50% deduction for donations to government approved charitable institutions and NGOs. Deduction restricted to 10% of gross total income.
  • 100% deduction for donations to some approved organizations like those working for promoting family planning, Swachh Bharat initiatives, scientific research, creating infrastructure for education, etc. No upper limit.
  • 50% deduction for contributions to certain government approved organizations involved in social causes like reducing poverty, education, gender inequality, etc. Max limit is 10% of adjusted gross total income.

Therefore, before donating, ensure you choose an approved charitable organization that offers up to 100% tax deduction under Section 80G.

What Documents Are Required to Claim Deduction

To claim 80G deductions, you must furnish these documents while filing income tax returns:

  • A receipt or certificate from the recipient institution showing their 80G registration details, PAN, donation amount and date. It should state that no goods or benefit was given in return for donation.
  • In case of over ₹10,000 donation, ensure Form 10GD is completed by the charity.
  • Submission of 15G/15H forms if tax was not deducted at source on donations above ₹10,000.
  • Your donation must be in a non-cash mode like cheque, card, or online transfer for it to qualify for 80G. Keep proof.

Therefore, section 80G is an excellent way to reduce your tax outgo while supporting worthy causes. Ensure you donate strategically and claim the deduction to maximize your tax savings.

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