SECTION 80G OF THE INCOME TAX ACT, 1961

Donating to charitable organizations, NGOs, and institutions is a meaningful way to support societal welfare, economic growth, and the upliftment of underprivileged communities. To encourage such contributions, the Government of India offers tax benefits under various provisions, including Section 80G of the Income Tax Act, 1961.

 

What is Section 80G?

Section 80G allows taxpayers to claim a deduction for donations made to certain approved funds, charitable institutions, or organizations. This deduction is available provided the conditions prescribed under the Act are fulfilled.

ELIGIBILITY TO CLAIM DEDUCTION UNDER SECTION 80G

Any taxpayer—whether an individual, company, firm, or any other person—can claim the benefit of Section 80G.

 

MODES OF CONTRIBUTION

Donations can be made via:

1. Cash
2. Cheque
3. Demand Draft
4. Digital modes

 

Important Note:
Cash donations exceeding ₹2,000 are not eligible for deduction. Hence, any donation above ₹2,000 must be made through non-cash modes to avail tax benefits.

Are donations in kind eligible?

No. Contributions in kind such as food, clothing, medicine, or materials are not eligible for deductions under Section 80G.

 

LIMITS ON DEDUCTION

The allowable deduction depends on the type of institution and the mode of donation. Deductions are categorized as follows:

Without Limit: 100% or 50% of the donation amount (depending on the fund/institution)

Subject to Limit: 100% or 50% of the donation, restricted to 10% of Adjusted Gross Total Income.

The remaining income, after the deduction, is taxed as per the applicable income tax slab.

 

REQUIRED DOCUMENTS TO CLAIM SECTION 80G DEDUCTION

To claim the deduction, the following details and documents are essential while filing your Income Tax Return:

1. Name and address of the donee
2. PAN of the donee organization
3. Amount donated
4. Proof of payment (receipt, bank transaction details)
5. Donation receipt stamped and issued by the recipient organization
6. Any other supporting documents as may be required

 

REGISTRATION OF CHARITABLE TRUSTS/INSTITUTIONS UNDER SECTION 12A

NGOs can be registered as Section 8 Companies, Trusts, or Societies with a charitable or religious objective. Section 12A of the Income Tax Act governs the registration of such non-profit organizations.

This is a one-time registration granted by the Income Tax Department, enabling the organization to claim exemption from income tax.

Relevant Provisions:

Sections 11, 12, 12A, 12AA, and 13 of the Income Tax Act lay down the conditions and procedures for registration and tax exemption for charitable/religious institutions.

 

ELIGIBILITY FOR 12A REGISTRATION

1. The organization must qualify under the definition of “charitable purpose” as per the Income Tax Act.
2. It must not be a private or family trust; only public charitable institutions are eligible.

 

BENEFITS OF 12A REGISTRATION

1. Income Tax Exemption on surplus income
2. Eligibility to apply for grants from government or international bodies
3. Access to tax benefits under Section 80G for donors
4. Enhanced credibility and transparency

 

PROCEDURE FOR OBTAINING 12A REGISTRATION

Application Filing:
The application must be submitted online to the Principal Commissioner or Commissioner of Income Tax within one year from the creation of the trust or institution.

 

Scrutiny and Additional Information:
The Commissioner may request further documents or clarification.The Commissioner will issue an order (approval or rejection) within six months from the end of the month in which the application is received.

Post-approval:
Once registered, the organization can claim income tax exemptions.

 

DOCUMENTS REQUIRED FOR 12A REGISTRATION

1. Self-certified copy of the Trust Deed or instrument used to establish the entity
2. Evidence of creation of trust (if no deed exists)
3. Certificate of registration from relevant authority (e.g., Registrar of Societies, Companies)
4. Copy of amended objectives, if any
5. Financial statements of the last three financial years
6. Activity report or note on the charitable work conducted
7. Copy of rejection order (if applicable)