How to Claim Deduction for Donations Under Section 80G?

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How to Claim Deduction for Donations Under Section 80G?

Donating to charitable organizations not only helps society but also provides tax benefits under Section 80G of the Income Tax Act, 1961. This section allows taxpayers to claim deductions for donations made to specified funds, charitable institutions, and NGOs.

In this article, we will cover eligibility, deduction limits, payment modes, and the process to claim deduction under Section 80G.

What is Section 80G of the Income Tax Act?

Section 80G provides a tax deduction for donations made to certain charitable institutions and relief funds. The deduction amount can be 100% or 50% of the donation, depending on the organization.

Key Features of Section 80G

  • Applicable to individuals, Hindu Undivided Families (HUFs), companies, and firms.

  • Donations can be fully exempted or partially exempted.

  • Only donations to government-approved charities qualify.

  • Cash donations exceeding ₹2,000 are not allowed for deductions (must be made via cheque, demand draft, or online payment).

Eligibility Criteria for Claiming Deduction Under Section 80G

To avail the deduction, taxpayers must meet the following conditions:

1. Who Can Claim?

  • Individuals, HUFs, companies, firms, and NRIs can claim deductions under this section.

2. Which Donations Qualify?

  • Donations must be made to government-recognized charities, relief funds, and NGOs.
  • Donations in kind (clothes, food, etc.) are not eligible for deductions.

3. Mode of Payment

  • Donations above ₹2,000 must be made via cheque, DD, or digital modes.

  • Cash donations above ₹2,000 are not allowed.

  • Donations in kind (gold, property, etc.) are not eligible.

How to Claim Deduction Under Section 80G?

Follow these steps to claim the deduction:

Step 1: Ensure the Donation Qualifies

  • Verify that the charity is approved under Section 80G.
  • Ensure the payment is made through an eligible mode (cheque, bank transfer, etc.)

Step 2: Collect the Donation Receipt

The donation receipt must include:

  • Name and address of the organization
  • PAN of the trust or institution
  • 80G registration number of the organization
  • Donation amount and date

Step 3: Verify the 80G Registration of the Charity

  • Check the validity of the 80G registration before donating.
  • Only donations made to registered institutions are eligible for deductions.

Step 4: Claim the Deduction While Filing ITR

  • Enter the donation details under "Deductions Under Section 80G" in your ITR form.
  • If claiming a deduction with a limit, ensure it does not exceed 10% of gross income.

Conclusion

Section 80G allows taxpayers to reduce their taxable income by donating to recognized charitable institutions. To maximize your tax benefits, ensure the charity is registered, follow the correct payment methods, and claim deductions correctly in your ITR filing.

If you need assistance with ITR filing and tax planning, consult a tax expert to ensure maximum tax savings while supporting a good cause!

FAQ's

1. Can I claim deductions for donations made to foreign charities?

No, only donations made to Indian-registered charities and funds qualify for deductions.

2. Are all donations eligible for 100% deduction?

No, some donations qualify for 100% deduction, while others qualify for 50% deduction, depending on the organization.

3. Can a company claim a deduction under Section 80G?

Yes, companies, firms, and individuals can claim deductions under Section 80G.

4. Can I claim a deduction for donations made in kind (clothes, food, etc.)?

No, only monetary donations qualify for deductions under Section 80G. Donations in the form of food, clothes, or other material items are not eligible.

5. Can NRIs claim deductions under Section 80G?

Yes, NRIs (Non-Resident Indians) can claim deductions under Section 80G if they have taxable income in India and donate to eligible Indian charities.

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