Charitable Donations

Reviewed by Komal | Updated on Aug 27, 2020

Introduction

Doing charity is an excellent task. Not just the God but the income tax department admits this fact. Therefore, you get more than just good karma for making charitable donations. Section 80G of the Income Tax Act offers a tax deduction on contributions made to certain charitable institutions prescribed under the Income Tax Act, 1961.

What is Charitable Donations?

Contributions made to certain relief funds and charitable institutions can be claimed as a deduction under Section 80G of the Income Tax Act. All donations, however, are not eligible for deductions under section 80G. Only donations made to prescribed funds qualify as a deduction.This deduction can be claimed by any taxpayer – individuals, company, firm or any other person.

Mode of donation eligible for deduction under section 80G:

  1. Only donations made in the form of cash or cheque are eligible for a tax deduction. However, donations made in cash do not qualify for a tax deduction exceeding Rs. 10,000.
  2. Donations made in kind do not qualify for any tax deduction.
  3. Starting FY 2017-18 any donations made in cash exceeding Rs 2000 will not be eligible for deduction. Therefore the donations exceeding Rs 2000 should be made in any mode other than cash to qualify as deduction u/s 80G.

Who is eligible to pay?

Not all donations qualify for 100% tax deductions. Some of them are restricted to 50% of the amount contributed, whereas some others qualify for the same deduction but up to a maximum limit of 10% of the adjusted gross total income of the taxpayer. The prescribed list of such institutions is provided in section 80G of the income tax act.

A detailed breakdown of the procedure for filing the tax

To claim such deduction in your income tax return, the following details have to be submitted:

  1. Name of the donee (the institution receiving the donation)
  2. PAN of the donee
  3. Address of donee
  4. Amount of contribution