Section 80G (Donations)
Section 80G of the Income Tax Act, 1961 provides deductions on donations made to specified funds, charitable institutions, and government entities — with eligible donations qualifying for either a 100% or 50% deduction, subject in certain cases to a qualifying limit of 10% of the donor's adjusted gross total income.
Section 80G classifies eligible donations into four categories based on the extent of deduction and whether a qualifying limit applies. Category 1 allows a 100% deduction without any qualifying limit — this covers donations to the Prime Minister's National Relief Fund, National Defence Fund, and certain other government-designated funds. Category 2 provides a 50% deduction without any qualifying limit for entities like the Prime Minister's Drought Relief Fund and certain national causes.
Category 3 allows a 100% deduction but subject to a qualifying limit of 10% of the donor's Adjusted Gross Total Income (AGTI). Category 4 allows a 50% deduction also subject to the 10% qualifying limit, and covers donations to most registered charitable trusts and NGOs. The AGTI is computed by deducting long-term capital gains, short-term capital gains under Section 111A, and all Chapter VIA deductions (except Section 80G itself) from the gross total income.
Budget 2017 introduced a significant compliance reform: from Assessment Year 2018–19, all donations above ₹2,000 must be made through non-cash modes (cheque, NEFT, RTGS, UPI, etc.) to qualify for deduction under Section 80G. Cash donations above ₹2,000 are entirely ineligible for deduction, regardless of whether the receiving institution is an approved entity.
The CBDT made a further change effective from Assessment Year 2021–22: charitable institutions seeking to issue Section 80G certificates are now required to register on the income tax portal, and donors must quote the institution's registration number in their ITR. The deduction is pre-filled in Form 26AS and the Annual Information Statement (AIS) based on data reported by the donee institution — donors should reconcile their actual donation receipts against AIS data before filing.
For equity investors and business owners, Section 80G is a tool for aligning philanthropic goals with tax efficiency. Corporates also use it through their Corporate Social Responsibility (CSR) spending, though CSR contributions to PM CARES Fund (a government fund) were eligible at 100% without qualifying limit during the COVID-19 period. Section 80G deductions are available only under the old tax regime.