Donations Eligible Under Section 80G – Income Tax Act

Giving to a good cause isn’t just about doing the right thing—it’s also a smart way to reduce your tax burden. In India, Section 80G of the Income Tax Act offers generous tax deductions to individuals and organizations that make charitable donations. But not all donations are treated equally, and there are specific rules you need to follow to maximize your benefits.

In this comprehensive guide, we’ll break down everything you need to know about Section 80G—how it works, who qualifies, how much you can claim, and how to ensure you do it right.

What Is Section 80G?

Section 80G is a provision under the Indian Income Tax Act that allows taxpayers to save money on taxes when they donate to approved charitable organizations and relief funds. It was introduced to encourage people and businesses to support social and nation-building causes by offering tax benefits in return.

These deductions are available to all taxpayers—individuals, companies, firms, or any other person, no matter what their source of income is.

How Much Can You Claim?

The deduction you can claim under Section 80G depends on two things:

1. Who you’re donating to
2. How much you’re donating

Eligible donations are grouped into four broad categories:

• 100% deduction with no upper limit
• 50% deduction with no upper limit
• 100% deduction subject to 10% of adjusted gross total income
• 50% deduction subject to 10% of adjusted gross total income

Example:

• Donations to the Prime Minister’s National Relief Fund are eligible for 100% deduction with no limit.
• Donations to approved NGOs or trusts typically qualify for a 50% deduction, with or without a limit, depending on the organization’s status. 

You can check the List of Donations Eligible for the Deduction Under Section 80G.

Cash vs. Digital Donations: What You Need to Know (FY 2024-25)

When it comes to claiming tax deductions under Section 80G, the mode of payment matters just as much as the amount donated. With a strong push toward transparency and digital accountability, the Income Tax Department has put strict rules in place for donation modes.

Here’s a breakdown of how the mode of donation impacts your eligibility for tax deductions:

✅ Digital & Non-Cash Donations (Recommended)

Donations made through the following modes are fully eligible for tax deductions under Section 80G (subject to category limits):

• Bank transfers (NEFT/RTGS/IMPS)
• Cheques or Demand Drafts
• Debit/Credit cards
• UPI, mobile wallets, or other authorized digital gateways

Why use digital payments?

They are transparent, traceable, and ensure that your donation is backed by a proper payment trail, which is mandatory for higher deduction eligibility.

📢 Important Update: Many charitable institutions now provide online portals with instant 80G-compliant digital receipts, making your documentation process seamless.

🚫 Cash Donations: Limited Eligibility

• Maximum cash donation allowed for deduction: ₹2,000
• Any amount above ₹2,000 given in cash is not eligible for deduction under Section 80G.

This restriction has been in place since April 1, 2017, and remains unchanged as of FY 2024-25. The cap is designed to curb misuse and untraceable cash transactions.

Donations in Kind:

• Eligibility for Deduction: Contributions made in kind, such as donating food, clothing, or other goods, are not eligible for tax deductions under Section 80G. The provision strictly applies to monetary donations. ​

Quick Tips to Stay Compliant

• Always use digital or banking channels for donations exceeding ₹2,000.
• Collect proper donation receipts that include:
  • Name of the trust/organization
  • PAN and registration number under 80G
  • Date and amount donated
  • Mode of payment
• Retain proof of payment (bank statement, UPI receipt, etc.) for your records and ITR filing.

Using digital payment modes isn’t just more convenient—it’s also the only way to ensure that your generous donation translates into a valid tax-saving opportunity under Section 80G.

Who Can Claim 80G Deductions?

Any taxpayer in India—whether salaried, self-employed, or a business entity—can claim deductions under Section 80G. However, the key condition is that the recipient organization must be approved and registered under the Income Tax Act.

You must also provide proper documentation, which includes:

• A donation receipt with the donor’s name, amount, and PAN of the trust
• A certificate or registration number under 80G

For businesses, integrating donation tracking into your payroll software can help to simplify compliance and maintain accurate records for tax filings, especially when contributions are made on behalf of employees or through CSR initiatives.

How to Claim the Deduction on Your Tax Return

To avail the deduction:

1. Collect all your donation receipts before filing your Income Tax Return (ITR).
2. In your ITR form, locate the section where you can declare deductions under Chapter VI-A.
3. Enter the relevant donation amount under Section 80G.
4. Specify the category (e.g., 50% with limit, 100% without limit, etc.).
5. Keep all receipts and proofs ready in case the tax authorities request verification.

Why Section 80G Matters?

Apart from the tax savings, Section 80G is a powerful tool that connects people to social causes. It fosters a culture of giving and ensures that legitimate organizations receive the support they need. It also enables transparency and accountability since approved organizations are subject to audit and compliance checks.

Tips for Donating Wisely

1. Verify the Organization: Only donate to registered and verified NGOs/trusts. Look for a valid 80G certificate.
2. Avoid Cash Beyond ₹2,000: Use digital modes for higher deductions.
3. Keep Records Safe: You’ll need proof at the time of tax filing.
4. Donate Mindfully: Ensure your contribution is going toward a meaningful cause that aligns with your values.

Conclusion

Donating to a good cause is always rewarding, but when you do it the right way, it can also help you save on taxes. Section 80G lets you turn your generosity into smart savings. Just remember to donate to approved organizations, use digital payment modes, and keep your receipts safe. Whether you’re an individual or a business, giving back doesn’t just feel good—it makes smart financial sense. So, the next time you donate, do it with purpose, plan it well, and let your kindness count on your tax return too.

Articles You Might Find Interesting:

• Section 80EE of the Income Tax Act
• Section 80EEA of the Income Tax Act
• Section 80U Deductions
• Section 80C Deductions

🔍 Frequently Asked Questions (FAQs)