Section 80G: Tax Deduction on Donations

Giving to charity is generous on its own, but the tax law also rewards it. Section 80G of the Income Tax Act lets you deduct part — sometimes all — of what you donate to approved funds and charitable institutions from your taxable income. The catch is that the rules are fiddlier than most people assume. The deduction is not always 100%, it is not always unlimited, and from FY 2025-26 it is only available if you stay on the old tax regime.

This guide walks through exactly how Section 80G works, who can claim it, the four categories of donations, the qualifying limit that trips people up, and a worked example in rupees so you can see the real benefit.

What Section 80G Actually Allows

Section 80G provides a deduction from your gross total income for donations made during the financial year to specified funds, institutions, and charitable organisations. It sits in Chapter VIA of the Act, the same chapter as Section 80C and 80D.

A deduction is not the same as a tax credit. If you are in the 30% slab and you get a ₹10,000 deduction, your tax falls by roughly ₹3,000, not ₹10,000. The donation reduces the income on which tax is computed; it does not reduce the tax rupee-for-rupee.

Two threshold rules apply to everyone:

• Regime: From FY 2023-24 the new regime is the default, and Section 80G is not available under it. To claim 80G you must opt for the old regime. Compare the two with an income tax calculator before you decide, because the lost deduction may not be worth giving up the lower slab rates.
• Mode of payment: Donations made in cash above ₹2,000 are not eligible. Anything above that threshold must be paid by cheque, demand draft, UPI, card, or bank transfer. Donations in kind — clothes, food, medicines, laptops — get no deduction at all, regardless of value.

The Four Categories of Donations

This is the part that confuses most taxpayers. Section 80G donations are not all treated the same. They fall into four buckets, defined by two questions: what percentage is deductible (100% or 50%), and whether a qualifying limit applies.

Category	Deduction	Qualifying limit applies?	Typical examples
1	100%	No	PM National Relief Fund, National Defence Fund, PM CARES Fund, Swachh Bharat Kosh, National Children's Fund
2	50%	No	Prime Minister's Drought Relief Fund, Jawaharlal Nehru Memorial Fund (notified funds)
3	100%	Yes (10% of adjusted GTI)	Donations to government / approved local authority for family planning, Indian Olympic Association
4	50%	Yes (10% of adjusted GTI)	Most registered NGOs, charitable trusts, religious institutions with 80G approval, government for charitable purposes

The overwhelming majority of donations ordinary taxpayers make — to a registered NGO, a hospital trust, a school foundation, a temple or church with valid 80G registration — fall into Category 4: 50% deduction, subject to the qualifying limit. People assume the whole donation is deductible, which is why the actual refund often disappoints.

The Qualifying Limit, Explained

For Categories 3 and 4, you cannot deduct unlimited amounts. The donations in those two categories are first capped at the qualifying limit, which is 10% of your adjusted gross total income. Only after applying that cap do you take 50% (or 100%) of the capped figure.

"Adjusted gross total income" for this purpose means your gross total income reduced by:

• Long-term capital gains
• Short-term capital gains taxed at special rates (such as equity STCG)
• Deductions already claimed under other sections of Chapter VIA (80C, 80D, etc.), excluding 80G itself
• Income on which tax is not payable

So the sequence is:

1. Compute adjusted gross total income.
2. Take 10% of it — this is your qualifying limit.
3. Add up your Category 3 and 4 donations. If they exceed the qualifying limit, cap them at the limit.
4. Apply the correct percentage (100% or 50%) to the capped amount.
5. Donations in Categories 1 and 2 are added on top and are not affected by the limit.

If that sounds abstract, the worked example below makes it concrete.

A Worked Example in Rupees

Meet Arjun, a salaried professional in Bengaluru on the old regime. For FY 2025-26 his numbers look like this:

• Gross total income: ₹14,00,000 (salary only, no capital gains)
• Deductions claimed under 80C: ₹1,50,000
• Deduction under 80D (health insurance): ₹50,000

During the year Arjun donated:

• ₹40,000 to the PM National Relief Fund (Category 1 — 100%, no limit)
• ₹1,20,000 to a registered education NGO with valid 80G approval (Category 4 — 50%, with limit), all by bank transfer

Step 1 — Adjusted gross total income:

₹14,00,000 − ₹1,50,000 (80C) − ₹50,000 (80D) = ₹12,00,000

(We subtract the other Chapter VIA deductions but not 80G itself.)

Step 2 — Qualifying limit (10%):

10% × ₹12,00,000 = ₹1,20,000

Step 3 — Apply the limit to the Category 4 donation:

Arjun's Category 4 donation is ₹1,20,000, which is exactly equal to the qualifying limit, so the full ₹1,20,000 qualifies.

Step 4 — Apply the 50% rate:

50% × ₹1,20,000 = ₹60,000 deductible

Step 5 — Add the Category 1 donation in full:

The ₹40,000 to the PM National Relief Fund is 100% with no limit, so all ₹40,000 is deductible.

Total 80G deduction = ₹60,000 + ₹40,000 = ₹1,00,000

Arjun donated ₹1,60,000 in total but can only deduct ₹1,00,000. At his 30% marginal rate, the actual tax saving is roughly ₹30,000 plus cess — around ₹31,200. The donation to the relief fund was far more tax-efficient than the NGO donation, even though the NGO received three times as much.

Had Arjun donated ₹2,00,000 to the NGO instead of ₹1,20,000, his deduction would still have been capped — only ₹1,20,000 of it would qualify, then halved to ₹60,000. The extra ₹80,000 of generosity earns no extra deduction.

Documents You Need to Claim 80G

To survive any scrutiny, keep:

• A stamped receipt from the institution showing its name, address, PAN, the amount, and the donation date.
• The institution's 80G registration / approval number (it is usually printed on the receipt).
• For Category 1 and 2 funds, proof of the specific fund — the receipt naming, say, the PM National Relief Fund.
• Your bank or UPI record showing the payment, since cash above ₹2,000 is disallowed.

Institutions now file Form 10BD (a statement of donations received) with the tax department and issue you a Form 10BE certificate. The donation then flows into your Annual Information Statement, which the department uses to pre-fill and cross-verify your claim. If you claim a figure that does not match what the institution reported, you will likely get a notice. Treat the 10BE certificate as your primary proof. Storing all of these alongside the rest of your filing paperwork — see the tax document checklist — saves a scramble at filing time.

How to Report 80G in Your ITR

In the ITR forms (ITR-1 through ITR-4 as applicable), Schedule 80G asks you to enter donation details split by category. For each donation you typically provide:

• Name and PAN of the donee
• Address
• Amount donated (cash and non-cash split)
• The eligible deduction amount after applying the percentage and limit

The utility on the income tax portal computes the qualifying limit for Categories 3 and 4 once you enter the donations correctly — but only if you have classified each donation into the right category. Misclassification is the most common error.

80G Versus Other Charitable and Welfare Deductions

Section 80G is not the only charity-linked deduction, and people sometimes mix them up:

• Section 80GGA covers donations for scientific research or rural development. It is for taxpayers who do not have business income and overlaps in spirit with 80G but applies to specific approved institutions.
• Section 80GGC covers contributions to political parties or electoral trusts — these get a 100% deduction with no upper cap, but again only if paid by non-cash means. This is separate from 80G and reported in its own field.
• Section 80G itself is the broad charitable-donation provision and the one most individuals use.

Knowing which section a contribution belongs to matters, because each has its own schedule in the ITR and its own conditions. A donation to a political party is never claimed under 80G — it goes under 80GGC. Putting it in the wrong place is a frequent filing error that can hold up processing.

Why the Category of the Fund Matters More Than the Amount

A subtle but important planning point: from a pure tax-efficiency standpoint, where you donate often matters more than how much. A ₹50,000 donation to a Category 1 fund (100%, no limit) gives a full ₹50,000 deduction. The same ₹50,000 to a typical Category 4 NGO gives only ₹25,000 — and even that ₹25,000 can be trimmed if you breach the 10% qualifying limit.

This does not mean you should only ever give to government relief funds. Charitable intent is personal, and the cause you care about should drive the donation. But if you are deciding purely on tax grounds how to split a fixed charity budget, front-loading Category 1 funds extracts the maximum deduction per rupee. Many donors give to both — a relief fund for the tax efficiency and a chosen NGO for the cause — and that is a perfectly reasonable approach.

Common Mistakes

Assuming every donation gives 100% deduction. Most NGO donations are 50%, often further restricted by the qualifying limit. The headline figure on your receipt is the donation, not the deduction.

Donating cash above ₹2,000. A ₹2,500 cash donation in the temple hundi is generous but earns zero deduction. Use UPI or a cheque for anything above ₹2,000.

Claiming donations in kind. Old clothes, blankets, food packets and used electronics may help people, but they do not qualify under 80G. Only money counts.

Donating to an institution without valid 80G approval. Not every charity is registered. Without a valid 80G approval and a receipt carrying the registration number, there is no deduction — verify before you give if the tax benefit matters to you.

Forgetting the qualifying limit while planning. People time a large year-end donation expecting a big refund, then discover the deduction was capped at 10% of adjusted GTI. If tax efficiency is the goal, donate to Category 1 funds, which have no limit.

Claiming 80G under the new regime. It simply is not allowed. If you are on the new regime, the deduction is zero no matter how much you gave.

Ignoring the AIS mismatch. If the institution reported a different amount (or did not report at all), your claim is exposed. Reconcile your receipts against your AIS before filing.

What to Do Next

• Decide your regime first. If you are committed to the new regime for its lower rates, 80G is irrelevant — donate for the cause, not the deduction. If you are on the old regime, 80G is a genuine bonus. Compare both with the income tax calculator.
• For maximum tax efficiency, prioritise Category 1 funds (100%, no limit) when the cause aligns with your intent.
• Always pay donations above ₹2,000 digitally and collect a proper receipt with PAN and the 80G number.
• Before filing, download your AIS and match every donation. Keep the Form 10BE certificate.
• If your charitable giving is large or spread across many institutions, a quick consultation with a CA ensures you classify each donation correctly and do not over-claim.

Section 80G rewards giving, but only if you give the right way — digitally, to approved institutions, and with an eye on the category and the qualifying limit. Get those three things right and the deduction follows.

Disclaimer: This article is for educational purposes only and is not tax advice. Tax rules change frequently — verify current provisions on the official income tax portal or with a qualified CA before filing.