The amount of donation which can be claimed as a deduction under section 80G is determined as per certain rules. You can claim either 100% or 50% of the amount donated as a deduction subject to ‘With’ or ‘Without’ the upper limit.
How much of the amount donated can be claimed as deduction and whether with or without upper limit depends on the entity to which you are donating. Therefore, choose the recipient of your charity with care.
The income tax department has notified (and periodically updates) a list of institutions/entities specifying the limit on the deduction that can be claimed on donations made to each entity.
A deduction can be claimed under section 80G only when the contribution is made to specified funds and institutions either via cheque or cash.
Effective from the assessment year 2018-19, a person can avail a maximum deduction of Rs 2,000 if the donation is made in cash. However, there is no maximum limit on the deduction amount if the payment is made via cheque or digital payment methods.
Earlier, the maximum limit allowed for donation in cash was Rs 10,000, but the Union Budget of 2017 reduced this to Rs 2,000 in order to curb tax filers from misusing this section by submitting fake donation receipts.
Please note that any donation made in kind such as in the form of clothes, food rations etc. cannot be claimed as deductions under this section.