Section 80G
Section 80G of the Income Tax Act allows individuals and HUF to claim a deduction for donations made to approved charitable institutions and government-notified relief funds, available under the old tax regime only.
Understanding Section 80G
Section 80G categorises donations into four buckets: 100% without limit, 100% subject to limit, 50% without limit, and 50% subject to limit. The receiving institution must hold a valid 80G certificate from the Income Tax Department — donors must collect a receipt with the trust's PAN, registration number, and donation amount.
The 10% of adjusted gross total income (AGTI) cap for limit-restricted donations applies to your aggregate donations to all such institutions — not per institution. AGTI is your total income before claiming Chapter VI-A deductions (so it's after standard deduction but before 80C/80D).
Why it matters
For donors, the 80G deduction reduces the after-tax cost of giving. A ₹50,000 donation in the 30% slab effectively costs ₹35,000 after tax savings, making consistent giving more accessible. Always verify the trust's 80G certificate validity before donating — the IT department periodically de-registers trusts that fail compliance.
Example
A taxpayer with ₹15 lakh AGTI donates ₹2 lakh to a registered trust eligible for 50% deduction with 10% AGTI cap. Maximum deductible: 10% of ₹15 lakh = ₹1.5 lakh. Of that, 50% qualifies = ₹75,000. At 30% slab, tax saving = ₹23,400. The remaining ₹1.25 lakh of donation is not tax-deductible — it's pure charity.
A taxpayer with ₹15 lakh AGTI donates ₹2 lakh to a registered trust eligible for 50% deduction with 10% AGTI cap. Maximum deductible: 10% of ₹15 lakh = ₹1.5 lakh. Of that, 50% qualifies = ₹75,000. At 30% slab, tax saving = ₹23,400. The remaining ₹1.25 lakh of donation is not tax-deductible — it's pure charity.