Documents Required to Claim Deduction under Section 80G

Individuals wishing to claim deduction under Section 80G need to have the following documents to support their claim.

1) Duly Stamped Receipt: It is mandatory to have a receipt issued by the trust/charity which receives a donation. This receipt should include details like the name, address and PAN number of the trust, amount donated and the name of donor.

2) Form 58: Form 58 is essential if a donor intends to claim 100% deduction on a donation, without which their donation will not be eligible for 100% deduction.

3) Registration Number of Trust: Each eligible trust is provided with a registration number by the Income Tax Department and donors should ensure their receipt contains this number. This registration number needs to be valid on the date of a particular donation, failing which a donation might be in eligible for deductions.

Deduction under Section 80G

Donations paid towards eligible trusts/charities which qualify for tax deductions are subject to certain conditions. Donations under Section 80G can be broadly classified under four categories, as mentioned below.

1. Donations with 100% deduction (Without any qualifying limit): Donations made under this category enjoy 100% tax deduction and are not subject to any qualification limit being met. Donations to the National Defence Fund, Prime Minister’s National Relief Fund, The National Foundation for Communal Harmony, National/State Blood Transfusion Council, etc. qualify for such deductions.
2. Donations with 50% Deduction (Without any qualifying limit): Donations made towards trusts like Prime Minister’s Drought Relief Fund, National Children’s Fund, Indira Gandhi Memorial Fund, etc. qualify for 50% tax deduction on donated amount.
3. Donations with 100% deduction (Subjected to 10% of adjusted gross total income): Donations made to local authorities or government to promote family planning and donations to Indian Olympic Association qualify for deductions under this category. In such cases, only 10% of the donor’s Adjusted Gross Total Income is eligible for deductions. Donations which exceed this amount are rounded off to 10%.
4. Donations with 50% deduction (Subjected to 10% of adjusted gross total income): Donations made to any local authority or the government which would then use it for any charitable purpose qualify for deductions under this category. In such cases, only 10% of the donor’s Adjusted Gross Total Income are eligible for deductions. Donations which exceed this amount are capped at 10%.

Scope of Deduction:

There are certain basic criteria which must be met for a donation to be valid under Section 80G. Some of the major points are mentioned below.

• Donations should be paid through taxable or exempted income only. Donations made through other non-taxable income sources do not qualify for deduction.
• Only those donations which are paid in cash or cheque are eligible, with donations made in the form of clothes, food, medicines, etc. not eligible under Section 80G.
• Only companies are eligible for deductions when it comes to donations made to the Indian Olympic Association.
• Only those donations made to valid and registered trusts qualify for deductions.
• Donation made to foreign institutions and political parties are exempt from deductions.

Tax Benefits to the Organisation

The 80 G certification not only provides the donors with a tax exemption on the amount donated (depending upon the annual income of the donor), but also gives tax benefits to the non-profitable organisation.

The institution can get an exemption of 10% for the gross income earned through donations and contributions.

The Income Tax Department has the power to approve or reject such approval upon disqualification of the non-profit organisation or dissatisfaction found by the department towards the NGO’s activities.

The primary role of 80G certification is to encourage donors to donate funds to the non-profit organisation. With the certification, donors can save reduce their tax liability by up to 10% for 50% of the amount donated.