Section 80G: New set of FAQs issued on tax deductions for religious donations; check details

The Income Tax Department has issued a new set of FAQs to resolve uncertainties around tax deductions for donations under Section 80G of the Income Tax Act, 1961. The FAQs shed light on what counts as a qualifying donation, which deduction rates may apply, and which compliance steps are necessary. By doing so, the authorities intend to offer certainty to both donors and registered charities, as individuals, companies, and trusts consider how to lower their tax obligations through philanthropy. 

What is Section 80G?

Section 80G provides tax relief for sums donated to certain approved funds, charities, and similar bodies, subject to strict conditions. The newly published FAQs break down how the law separates donations eligible for relief. Only contributions to entities that are either expressly named in Section 80G(2)(a) or currently registered with the department may be deducted.

Taxpayer should note that all contributions do not grant tax relief; taxpayers must check the status and listing of any recipient institution to confirm eligibility for deduction.

Donations that meet the requirements fall into four distinct deduction categories, arranged by the permitted deduction percentage and any limits that may apply. There are donations that allow a full 100% deduction without ceiling. For example, those made to certain national funds or bodies authorised by the government.

"Only donations made to specified trusts, charitable funds or institutions, which are specifically mentioned under section 80G(2)(a) of the Act and funds or institutions registered and approved under Section 80G by the Income Tax Department, are eligible for deduction," the Income Tax Department says.

Four donation categories

The four categories of donations mentioned based on deduction limits are

Category    Deduction Amount    Maximum Limit

100% without limit    Full donation amount    No limit
50% without limit    50% of donation amount    No limit
100% with limit    Full donation amount    10% of adjusted gross total income
50% with limit    50% of donation amount    10% of adjusted gross total income
 
Some donations, such as those directed at family planning through authorised channels, offer a 100% deduction but only up to a qualifying limit. Other categories yield a 50% deduction, where limits may or may not apply depending on the specific recipient. As an illustration, giving to the Prime Minister's Drought Relief Fund attracts a 50% deduction with no cap.

Deductions under the section

The Income Tax Department has stressed the necessity for solid documentation when claiming these deductions. Donors are required to obtain a Certificate of Donation in Form 10BE from the recipient, wherever mandated, per Rule 18AB of the Income Tax Rules, 1962. 

In addition, taxpayers should verify both the eligibility and classification of donee institutions by consulting the official exempted bodies register maintained online by the department. This practice is aimed at reducing mistakes and narrowing the scope for invalid claims to be processed.

A further safeguard requires certain recipients to file Form 10BD, which sets out comprehensive details about each donor: PAN or Aadhaar number, name, address, and the gift amount. The deduction a donor seeks in their tax return must align with the entries reported by the recipient in this form. 

"As per Rule 18AB of the Income Tax Rules, 1962, it is mandatory for certain category of donees to file Form 10BD, which includes detailed information about each donor—such as their PAN or Aadhaar number, name, address, and the amount donated by the donor etc," the Income Tax Department says.

Eligibility for Section 80G

Eligibility for Section 80G deductions covers all taxpayers—individuals, Hindu Undivided Families (HUFs), companies, partnerships, or any other body with taxable income—if qualifying gifts have been made. The guidance again clarifies the distinction: a donor provides the funds to an authorised trust or fund, whereas a donee is the eligible organisation, registered or approved under Section 80G, that receives such contributions.

The Department advises donors to examine the deduction category tied to their contribution as set out in Section 80G and to use the official online lists to check recipient status. This approach, detailed in the new FAQs, is intended to promote easier compliance and guard against mistakes. Furthermore, donors should note that cash donations above two thousand rupees are not eligible for deduction under prevailing rules.

FAQs

Which donations are eligible for 100% deduction?

There are 24 funds/ categories of donations eligible for 100% deduction without any qualifying limit. You can check the official list here.

Which donations are eligible for 50% deduction?

Donations to the funds or institutions listed under section 80G(2) sub-section (a) sub-clause (iii) are eligible for 50% deduction.

Which donations qualify for a 100% deduction with qualifying limit?

Donations to the funds or institutions listed under section 80G(2) sub-section (a) [sub-clause (vii)] and sub-section (c) eligible for deduction under section 80G of the Act for 100% with qualifying Limit.

Which donations qualify for a 50% deduction with qualifying limit?

Any sum paid to the funds or institution mentioned under section 80G(2)(a) (subsections (iv), (v), (vi), (via)) and 80G(b).

How much cash donation is allowed for deduction?

Any cash donation above Rs 2,000 is not eligible for deduction under Section 80G.