80G Exemption Guide: Eligibility, Tax Benefits and Latest Updates

Introduction

Donating to a cause close to your heart is fulfilling in many ways, but did you know it can also bring tax benefits? Donations to eligible charitable organizations under Section 80G of the Income Tax Act can help reduce your taxable income. This blog will walk you through everything you need, including 80G exemptions, eligible donations, deduction limits, forms, and tax benefits.

So, let’s get started on how you can give back while getting back in the form of tax benefits!

What is 80G Exemption and Eligible Donations?

Under the Income Tax Act of India, taxpayers can avail of deductions for donations made to charitable organizations under Section 80G. However, not all donations qualify, so it’s essential to understand the eligibility criteria.

Key Highlights:

• Applicable to: Individuals, HUFs, Companies, Firms
• Mode of donation: Cash (up to ₹2,000), Cheque, Digital Payment
• Types of deductions: 50% or 100% based on the organization’s category

For example, if you donate ₹10,000 to a registered charity under Section 80G and the organization falls under the 50% eligible category, you can deduct ₹5,000 from your taxable income.

Eligibility Criteria for Claiming Section 80G Exemption

Specific eligibility criteria must be met to benefit from Section 80G deductions. These include:

For Section 80G:

• Donations should be made to a charity that is registered under Section 80G.
• Donations to some organizations may allow 100% deductions, while others may allow only 50%.
• The deductions can be made by both individuals and businesses (corporate taxpayers).
• Only donations made in India qualify for the deduction, except for specific specified foreign donations.

80G Exemption List: Eligible Organizations

Not all donations are created equal in the eyes of the taxman. Here’s a breakdown of the different categories of donations and their respective tax benefits:

1. 100% Deduction Without Limitation: Donations to the Prime Minister’s National Relief Fund, the National Defence Fund, or the National Foundation for Communal Harmony qualify for a 100% deduction with no upper limit.

2. 50% Deduction Without Limitation: Donations to recognized charities like the Red Cross Society also qualify for a 50% deduction.

3. 100% Deduction with a Ceiling: Some donations qualify for 100% deductions, but the amount is limited to a set ceiling—for example, donations to certain charitable institutions.

4. 50% Deduction with a Ceiling: Donations to other qualifying organizations not mentioned under the 100% category may offer 50% deductions with limitations.

These donations can be made in cash, cheque, or even online (via UPI, debit/credit cards), but you should always retain a receipt for the donation to claim tax benefits.

80G Exemption Limit

1. For individuals: There is no maximum donation amount, but deductions are limited to 10% of gross total income.

2. For salaried persons: The maximum claim depends on income, but higher donations should align with income tax slabs.

3. ISKCON Donation 80G Exemption Limit: Donations made to ISKCON (International Society for Krishna Consciousness) qualify under Section 80G, but the deduction percentage depends on government recognition. Some branches may offer a 50% deduction, while others could be eligible for 100%.

How to Claim Deductions

To claim the deductions, you need to ensure the following:

1. Obtain a receipt for the donation from the charity organization. This should include the organization’s name, address, registration number under Section 80G, and the amount donated.

2. In your ITR, you can mention your donation amount and claim the relevant deductions.

3. If required, attach proof of donation along with the ITR. You can use the donation certificate provided by the organization.

Documents Required for Claiming 80G Exemption

To ensure your donation is eligible for a tax deduction, keep these documents handy:

• Donation receipt: Issued by the charity with the Section 80G registration number.
• Income tax return: Where you claim the deduction.
• Bank statements or proof of payment: If you donated via cheque, UPI, or another digital payment mode, ensure you have the transaction details.

Note: If your donation is above ₹2,000, you cannot claim a deduction unless made via digital payment.

Impact of Donations on Tax Savings

Donations can significantly reduce your taxable income, leading to reduced tax liability. Let’s look at these scenarios:

Example 1: If your annual income is ₹10,00,000, and you donate ₹20,000 to a registered charity eligible under Section 80G, you can claim a deduction on that amount, thereby lowering your taxable income to ₹9,80,000. This reduction can help you save on taxes.

Example 2: If you donate ₹50,000 to a charity eligible for a 100% deduction, you can reduce your taxable income by ₹50,000.

What are the Key Differences between Section 80G and Section 80GCA

Here’s a comparison between Section 80G and Section 80GGA:

Basis	Section 80G	Section 80GGA
Purpose	General charitable donations	Donations for scientific research/rural development
Eligibility	All taxpayers (individuals, HUFs, companies)	All taxpayers except those with business income
Maximum Deduction	Varies by the organization; up to 100% or 50%	100% of the amount donated

Conclusion

Section 80G exemption is a great way to give back to society while enjoying reduced tax liability benefits. You can maximize your tax savings by understanding which donations qualify, keeping the necessary documentation, and filing your return correctly.

Remember, every donation you make supports a worthy cause and contributes to your financial well-being by lowering your taxable income. So, why wait? Start contributing today, and let your generosity work wonders for your tax returns.

Need help with claiming tax deductions or want to ensure your donations qualify? Contact RegisterKaro today! Our experts can guide you through the process, ensuring you get every penny of your eligible deductions.

Frequently Asked Questions (FAQs)

1. What types of donations are eligible for deductions under Section 80G?
Donations to charitable organizations, the PM Relief Fund, and several other approved charities qualify for deductions.

2. Can I claim donations made in foreign currencies?
Donations made in foreign currency are generally not eligible for deductions under Section 80G, except for specific foreign donations.

3. Is there a limit on how much I can donate and still claim deductions?
The limits vary based on the charity’s category. Some donations offer 100% deductions with no cap, while others are capped at a percentage of the donation amount.

4. Do I need to submit proof of donation and my tax return?
You should keep receipts and proof of payment, especially for donations above ₹2,000.

5. Can I claim deductions for donations made to religious institutions?
Donations to particular religious institutions may be eligible under Section 80G, depending on the organization’s registration status. Check before donating.