Myth that Deduction under Section 80G is 100% allowed/exempted under Income tax is False. Many Donor’s and Tax payers believe that deductions under section 80G are tax-free or fully allowed as deduction from Income tax but in reality only donations given to government or its specified fund like PM Relief, National Relief, Earthquake Relief, National Children Fund are 100% allowed as Deduction and all other 80G donation are only 50% allowed or allowed subject to certain limit. Income Tax Deduction is also available for donations made by individual to funds or charitable institution as approved under section 12AA or 12A of Income Tax Act,and there is no restriction on the amount of charity but there is limit of how much is allowed as Income tax deduction. The rate of deduction, however, is either 50 percent or 100 percent, depending on the choice of trust.
Under this section 80G deductions are classified into four types:
i) 100% deduction on donation
ii) 50% deduction on donation
iii) 100% deduction subject to qualifying limit
iv) 50% deduction subject to qualifying limit
Here qualifying limit refers to 10% of adjusted gross total income (total income after all deductions have been accounted for except under section 80G and less of capital gains). This means the deduction can be 50% (or 100%) of the donation amount with maximum limit of 10% of your adjusted gross total income.
List of funds or organizations eligible for 80G deduction:
i) 100% deduction on donation to
1. Prime Minister’s National Relief Fund
2. National Defence Fund
3. Prime Minister’s Armenia Earthquake Relief Fund 176
4. The Africa (Public Contribution – India) Fund
5. The National Foundation for Communal Harmony
6. Approved university or educational institution of national eminence
7. The Chief Minister’s Earthquake Relief Fund, Maharashtra
8. Donations made to Zila Saksharta Samitis.
9. The National Blood Transfusion Council or a State Blood Transfusion Council.
10. The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air Force Central Welfare Fund
11. National Children’s Fund
ii) 50% deduction on donation to
1. Jawaharlal Nehru Memorial Fund
2. Prime Minister’s Drought Relief Fund
3. Indira Gandhi Memorial Trust
4. The Rajiv Gandhi Foundation
iii) 100% deduction subject to qualifying limit on donation to
The government or a local authority for promoting family planning.
iv) 50% deduction subject to qualifying limit on donation to
1. The government or any local authority for any charitable purposes other than for promoting family planning.
2. Any authority in India that is engaged in housing development, development of cities, towns and villages
3. Corporations promoting interests of Muslim, Christian, Sikh, Buddhist, Parsi communities.
4. Repair work of a notified temple, mosque, church, gurudwara, etc.