Deduction under section 80g of the income tax act

For amounts paid by the taxpayer as a contribution to any fund, institution, or charity Trust, a deduction under section 80g of income tax is permitted. Under the Income Tax Act, not all gifts are handled similarly. Donations to specific organisations and funds are eligible for 100% or 50% of the donation as a tax deduction, with no upper limit. However, depending on the qualifying amount, certain gifts are eligible for 100% or 50% deductions. Here are the notes on 80g deduction limit.

The following are necessary conditions for claiming a deduction under section 80g -

(1) All assessees, whether companies or non-companies are eligible for a deduction under this section, regardless of whether their income falls under the heading "profits and gains of business or profession" or not.

(2) The contribution must be monetary in nature.

(3) The gift shall only go to the designated funds or organisations.

(4) No deduction is permitted under this section for donations of more than Rs 2,000 unless they are made through a method other than cash.

(5) In order to be eligible for a deduction under this section, the assessee must present adequate proof of payment. The deduction under section 80g is not allowed where the payment is not supported by the submission of a valid receipt, etc.

(6) If a deduction is granted in relation to a donation for a certain assessment year, no additional deduction shall be granted in relation to that amount for that assessment year or any future assessment year.

Documents Needed to Redeem a section 80g Tax Credit

The following papers are required to support a deduction claim made by an individual under section 80g:-

(1) Properly Stamped Receipt: A receipt produced by the trust or charity that receives a gift is required. The name of the donor, the amount contributed, the trust's name, address, and PAN number should all be listed on this receipt.

(2) Form 58: If a donor wants to claim a 100% deduction for a contribution, they must submit Form 58; otherwise, their donation will not qualify for a 100% deduction.

(3) Trust Registration Number: The Income Tax Department assigns a registration number to each qualified trust; contributors should make sure their receipts include this number. If this registration number is not active on the day of a gift, the donation may not be eligible for tax deductions. You may visit donation under 80g.