Section 80G Deduction: Understanding the 100% and 50% Tax Exemption Categories

Double Benefits of 80G Deductions

Have you ever thought, “I want to help others, but it would be great if I could save on taxes too?” Well, here’s some good news—Section 80G of Income Tax Act lets you do both. When you donate to certain charities and NGOs, the government rewards you with a tax deduction. This means a part of your donation gets deducted from your taxable income, reducing the amount of tax you owe.

But here is the catch—not all donations get the same benefit. Some give you a 100% exemption, while others offer a 50% exemption. Confused? Don’t worry! We’ll break it down in the simplest way possible so you know exactly how to maximise your savings while doing a good deed.

What is Section 80G of Income Tax Act?

Under Section 80G, if you donate to an approved charitable organisation, a portion of your donation is deducted from your taxable income. This means you do not have to pay tax on that part of your income, lowering your overall tax liability.

For example:

• Suppose your annual taxable income is ₹10,00,000
• You donate ₹50,000 to a charity eligible under the 80G deduction
• If the donation qualifies for 100% exemption, your new taxable income becomes ₹9,50,000
• If it qualifies for 50% exemption, only ₹25,000 gets deducted, making your taxable income ₹9,75,000

However, not all donations qualify!

Before you start donating left and right to save on taxes, here’s something important—not every donation is eligible under Section 80G of Income Tax Act.

For a donation to qualify:

• The organisation must be registered under Section 80G
• The donation must be made through bank transfer, cheque, or online payment (cash donations above ₹2,000 are not eligible).
• The NGO or trust should have a valid 80G certificate issued by the Income Tax Department

So, if you want to donate and save tax, always check if the organisation is 80G-certified. This way, you can do good while making the most of your tax benefits!

100% vs. 50% Deduction: What’s the Difference?

Not all donations are treated equally when it comes to tax benefits. Under Section 80G of the Income Tax Act, some donations qualify for a 100% deduction, while others only get a 50% deduction. But what does that really mean? Let’s break it down with simple examples.

100% Deduction: Your Entire Donation Counts

If a charity qualifies for 100% tax exemption on donation, you can deduct the full amount from your taxable income. This means that if you donate ₹10,000, your taxable income is reduced by ₹10,000.

Examples of some organisations that qualify for 100% deduction:

• Prime Minister’s National Relief Fund
• National Defence Fund
• Certain government-backed NGOs

50% Deduction: Only Half of Your Donation is Deductible

For donations that qualify for a 50% deduction, only half the amount is deducted from your taxable income. So, if you donate ₹10,000, your taxable income is reduced by ₹5,000 instead of ₹10,000. Most private NGOs and charitable trusts qualify for only 50% deduction.

So, before you donate online, it is a good idea to check whether the NGO falls under 100% or 50% deduction to understand how much tax benefit you will actually get.

Capped vs. Uncapped Donations: The Hidden Rule

Did you know that some donations have a limit on how much tax benefit you can claim? That is right—not all donations give you unlimited deductions under Section 80 G Income Tax Act. They are divided into two categories:

• Without Limit: No restrictions—your full eligible donation gets deducted.
• With Limit: Deduction is capped at 10% of your gross income—even if you donate more, only up to this limit qualifies.

Example:

• If your income is ₹8 lakh and you donate ₹1 lakh to an NGO under the “with limit” category, only ₹80,000 is deductible.
• If the NGO falls under “without limit”, the full ₹1 lakh gets deducted.

So, before you donate, check if the donation has a cap to get the best tax benefit.

How to Claim 80G Deduction?

Claiming tax benefits on your donation is simple, but you need to follow a few steps to ensure eligibility under Section 80G of the Income Tax Act. Here is what you need to do:

• Get a Valid Donation Receipt – The receipt must have the NGO’s name, donation amount, date, and PAN number.
• Check 80G Registration – Ensure the NGO is officially registered under 80G to qualify for tax benefits.
• Use Approved Payment Methods – Donate via bank transfer, cheque, or online payment. Cash donations above ₹2,000 don’t qualify.
• Keep Form 10BE – From FY 2021-22, you need Form 10BE, issued by the NGO, to claim the deduction.
• Mention Details in Your ITR – While filing your income tax return, enter the NGO’s PAN and donation amount under the 80G section.

Follow these steps, and you can donate online while enjoying tax savings under the 80G deduction.

Donate Online & Make an Impact!

Now that you understand how 80 G income tax benefits work, why not use them for a good cause? Bal Raksha Bharat (also known as Save the Children India), a leading children’s NGO, has been working since 2004 to provide education, healthcare, and a better future for less privileged children in India. Your contribution can help them change countless lives.