Introduction
Section 80G of the Income Tax Act, 1961 allows taxpayers to claim deductions for donations made to specified funds, charitable institutions, and trusts. While the provision encourages philanthropy, it is also one of the most closely scrutinised deductions.
To strengthen compliance and reduce incorrect claims, the Income Tax Department has issued detailed FAQs under its NUDGE Campaign. This guide consolidates all statutory provisions of Section 80G along with every clarification issued through these FAQs, making it a complete and reliable reference for taxpayers.
What is Section 80G?
Section 80G provides a deduction while computing total income for donations made to certain approved funds, institutions, or causes. The deduction is available to individuals, HUFs, firms, companies, and any other taxpayer having taxable income, subject to prescribed conditions.
Donation vs Deduction
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Donation is the actual amount paid to a charitable institution or fund.
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Deduction is the portion of that donation which is allowed as a tax benefit while computing taxable income.
Every donation does not automatically result in a full deduction.
Donor and Donee Explained
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Donor: The person or entity making the donation.
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Donee: The trust, institution, or fund receiving the donation and registered under Section 80G.
How Deduction is Computed under Section 80G(1)
The computation of deduction depends on the nature of donations:
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If donations include special funds specified under Section 80G(2):
→ 100% deduction on such special donations
→ 50% deduction on remaining eligible donations -
If donations are made only to other eligible institutions:
→ 50% deduction on the total eligible donation amount
Eligible Donations under Section 80G(2)
Only donations specified under Section 80G(2) qualify. These include:
A. Government & National Funds
Certain national and government funds notified under clauses (i) to (iiihm) qualify for 100% deduction without limit (e.g. National Defence Fund, PM CARES Fund, Clean Ganga Fund).
Memorial funds such as Nehru, Indira Gandhi, and Rajiv Gandhi Memorial Funds qualify for 50% deduction without limit.
B. Other Eligible Donations
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Approved charitable institutions and funds
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Donations to government or local authorities for charitable purposes
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Housing and urban development authorities
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Corporations under Section 10(26BB)
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Approved bodies for family planning
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Donations for renovation of notified religious places of historic or archaeological importance
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Donations by companies for sports infrastructure and sponsorship
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Gujarat earthquake relief donations (for the notified period only)
Maximum Deduction Limit – Section 80G(4)
For certain categories of donations, deduction is restricted to 10% of Adjusted Gross Total Income (AGTI).
Any donation exceeding this limit is ignored and cannot be carried forward.
Four Categories of Donations under Section 80G
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100% deduction without limit
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50% deduction without limit
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100% deduction subject to 10% AGTI limit
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50% deduction subject to 10% AGTI limit
Correct classification is crucial for accurate claims.
Eligibility Conditions for Trusts & Institutions – Section 80G(5)
For a donee to be eligible under Section 80G, the institution must satisfy all prescribed conditions, including:
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Income must be exempt under Sections 11, 12, 10(23AA) or 10(23C)
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Trust deed must not permit use of funds for non-charitable purposes
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Institution must not benefit any particular religion or caste
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Proper books of account must be maintained
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Must be validly registered as a trust, society, company, or university
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Must be approved by the Principal Commissioner / Commissioner of Income Tax
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Institutions approved in FY 2007–08 are covered by a deeming provision
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Prescribed statements must be filed with the Income Tax Department
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Donation certificates must be issued to donors
One Donation, One Deduction – Section 80G(5A)
A donation claimed under Section 80G cannot be claimed under any other provision of the Income Tax Act in the same or any other assessment year.
Cash Donation Restriction – Section 80G(5D)
No deduction is allowed for cash donations exceeding ?2,000.
Only payments made through cheque, demand draft, or electronic modes are eligible.
Pending Applications – Section 80G(5E)
Applications for approval pending as on the specified date are treated as new applications under the updated rules.
Verification Mechanism – Explanation 2A
Deduction claims are verified based on information furnished by the donee institution in Form 10BD.
The donee must issue Form 10BE to the donor. Any mismatch between ITR data and Form 10BD can lead to disallowance.
Meaning of Charitable Purpose – Explanation 3
Charitable purpose does not include activities that are wholly or substantially religious in nature, except in notified cases.
Sports Associations – Explanation 4
Sports associations notified by the government are deemed to be charitable institutions for the purpose of Section 80G.
Donations in Kind – Explanation 5
Deduction under Section 80G is allowed only for monetary donations.
Donations in kind (food, clothes, goods, materials) do not qualify.
New Tax Regime Impact
Taxpayers opting for the new tax regime under Section 115BAC cannot claim deduction under Section 80G.
Filing Schedule 80G in ITR
To claim deduction:
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Go to “Deductions under Chapter VI-A”
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Select Section 80G
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Enter donee details, donation amount, and eligible deduction
Required details include:
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Name and PAN of donee
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Address of donee
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80G registration number
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Donation amount
If Donee Loses 80G Registration
Donations made after cancellation or expiry of 80G registration are not eligible for deduction. Donors must verify validity for the relevant assessment year.
Adjusted Gross Total Income (AGTI) Explained
AGTI is Gross Total Income reduced by:
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Deductions under Sections 80C to 80U (excluding 80G)
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Exempt income
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Long-term capital gains
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Short-term capital gains under Section 111A
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Income taxed at special rates under Sections 115A to 115D
Step-by-Step Deduction Calculation
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Compute Gross Total Income
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Calculate AGTI
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Compute 10% of AGTI (qualifying limit)
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Categorise donations
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Apply applicable deduction percentage
Conclusion
Section 80G is a beneficial but strictly regulated provision. With Form 10BD-based verification and the NUDGE Campaign, inaccurate or unsupported claims can easily result in disallowance and notices.
This guide incorporates all statutory provisions and every clarification issued through the Section 80G NUDGE FAQs, making it a complete compliance-ready reference for taxpayers.
Disclaimer:
This guide is for informational purposes only and does not constitute legal or tax advice. Readers are advised to consult a qualified tax professional before claiming deductions under Section 80G.