What is an 80G deduction?
An 80G deduction is the amount a donor may subtract for a gift of money to a fund or institution that section 80G approves. The gift has to be money, the institution has to be approved, and the donor has to be on a tax computation that still allows Chapter VI-A.
Who can claim it?
An individual, a Hindu undivided family, a firm, or a company can claim it when that person’s computation still allows the section. The new regime under section 115BAC does not allow section 80G. A company that opts for the 22 percent regime under section 115BAA does not get Chapter VI-A deductions other than the sections that regime keeps, and 80G is not one of them. A person on the ordinary rates can claim it in the return, on the income-tax return page. Other old-regime deductions, such as section 80C, are a separate cap, on the 80C page.
How much is deducted?
The section sorts gifts into four groups. Some are deducted at 100 percent of the sum given, with no further ceiling. Some are deducted at 50 percent, with no further ceiling. Some are deducted at 100 percent, and some at 50 percent, only up to 10 percent of adjusted gross total income. The Prime Minister’s National Relief Fund and the National Defence Fund are in the 100 percent group without that 10 percent ceiling. Any other fund is deducted only in the group the section gives it.
Adjusted gross total income, for this ceiling, starts from gross total income and removes long-term capital gains, short-term capital gains taxed under section 111A, incomes taxed at the special rates in sections 115A, 115AB, 115AC, and 115AD, and the Chapter VI-A deductions other than section 80G itself.
How must the gift be paid?
The gift has to be a sum of money. A gift of clothes, books, medicines, or food does not qualify. Cash qualifies only up to ₹2,000. A larger gift has to be paid by a mode other than cash. The donor keeps the receipt, which shows the institution’s name, address, and permanent account number, the donor’s name, and the amount. The institution reports the donation. There is no separate form the donor files only to obtain the deduction.
What must the institution hold?
The fund or institution must be one that section 80G approves for the year of the gift. That approval is not the same as registration of a charitable trust under section 12AB. The order on a trust’s registration is Form 10AC, explained on the Form 10AC page. A donor checks the receipt against the approval. A gift to a person who is not approved does not become deductible because the purpose was charitable.
Frequently asked questions
Four questions cover the new regime, cash, the rate, and the trust’s own registration.
Is 80G available in the new tax regime?
No. The new regime for individuals does not allow section 80G. A company that pays tax under section 115BAA does not get it either.
Does a cash gift above ₹2,000 qualify?
No. A donation in cash above ₹2,000 is not eligible. A gift of goods, clothes, or food is not eligible either.
Is every donation deducted in full?
No. Some approved gifts are deducted at 100 percent, some at 50 percent, and some of both kinds are also limited to 10 percent of adjusted gross total income.
Does 80G approval replace registration of the trust?
No. Approval under section 80G is what lets the donor claim this deduction. Registration of the trust under section 12AB is a separate order.
Sources
The deduction is section 80G of the Income-tax Act. Cash above ₹2,000 is excluded by section 80G(5D). The new regime is section 115BAC.