How to Save Tax Using Section 80G Deduction?

Posted by Narayan seva sanstha on August 30th, 2021

It\'s the time of year when you look for various ways to save as much tax as possible. You have already utilised the tax-saving benefits of deductions under section 80C, bought health insurance to save tax under section 80D, and are now looking for additional tax-saving deductions under the Income Tax Act, 1961.

Well, it’s time to save money while doing some good work by using deductions under section 80G of the

Income Tax Act. Section 80G of the I-T Act allows donations and charity made to certain relief funds and Charity Tax Exemption or deduction in gross total income before coming at taxable income.

Who Can Avail the Benefit?

The deduction under this section is not reserved for any particular category of the person/assesses. Any person who donates to the charitable trusts and relief funds set up by the government can make use of this deduction.

Keep in mind that any donation made to foreign charitable trusts and political parties is not deductible under this section. Any donation given by a person to foreign political parties or charitable trusts will be count as a deduction under section 80GGC of the I-T Act. So, in order to claim this deduction, you have to donate to charitable trusts that are set up by the Indian government only. 

Payment Method

A deduction under section 80G can only be claimed if the donations have been made either by cheque or cash to certain charitable institutions.

Previously, the maximum amount of deduction on monetary donations was ?10,000, but the Union Budget 2017 cut it down to Rs 2,000 to prevent misusing of this area as tax filers often submit fake receipts. Please note that no deductions can be claimed for donations made in kind, such as clothes, rations, etc.

Required Documents

For claiming this deduction, one must provide proof of donation with the normal receipt given by the trust/donee entity. You need to make sure that the receipt has the name, address, PAN number, registration number of the trust, donor\'s name, and donated amount in words and figures when you receive the receipt. This information is necessary to claim a deduction under section 80G at the time of filing ITR.

Make sure you are donating to the trusts that are associated with the government. Speaking of the percentage of tax exemption that you can avail of depends on and varies from organisation to organisation. For instance, you can claim 50% of the deductions on the donations made to the charitable organisations that are associated with the government.

So, this is how you can save tax using section 80G deduction. Donating to a charity is one of the best ways to make a difference in society and also save money.

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Narayan seva sanstha

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Narayan seva sanstha
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