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IT Rebate for Donations under section 80 G of the Income Tax Act, 1961

Source – Income tax department

IT Rebate for Donations under section 80 G of the Income Tax Act, 1961

Donations for charity come under section 80 G of the Income Tax Act, 1961. This section has classified charity funds under various heads, each of which give the donor a different kind of tax rebate. However, please remember, that for all charity donations the deductions are made directly from the gross total income of the assessee.

The contributions for charity fall under two broad categories :-

A) Those where the total sum donated is deductible from the assesse’s gross income. These donations would be more beneficial to you, in case you wish to donate for charity.

B) Those where only 50% of the amount donated will be deducted from total income.

Category (A)

According to the section 80 G these funds where 100% of the amount donated can be deducted are :-

  • The Prime Minister’s National Relief Fund.
  • The Prime Minister’s Armenia Earthquake Relief Fund.
  • The Africa (Public Contributions-India) Fund.
  • The National Foundation for Communal Harmony.
  • A University or any educational institution of national eminence as maybe approved by the prescribed authority. Please note that the prescribed authority in the case of a university or non-technical institution. Of national eminence is Director-General (Income-Tax exemption) in concurrence with the Secretary, University Grants Commission. In the case of any technical institution of national eminence the prescribed authority is the Director General (Income-Tax Exemption) in concurrence with the Secretary, All India Council of Technical Education.
  • The Maharashtra Chief Minister’s Earthquake Relief Fund.
  • Any Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district for the purpose of improvement of primary education in villages and towns in such a district and for literacy and post literacy activities.
  • The national Blood Transfusion Council or any State Blood Transfusion council whose sole objective is the control, supervision, regulation or encouragement in India of the services related to operation and requirements of blood banks.
  • Any fund set up by a State Government to provide medical relief to the poor.
  • The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund established by the armed forces of the Union for the welfare of the past and present members of such forces or their dependants.
  • The Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996.
  • The National Illness Assistance Fund.
  • The Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund in any State or Union Territory.
  • The Government, or any local authority, institution or association as maybe approved by the Central Government for the purpose of promoting family planning.

Category (B)

The funds under which donations will qualify for deductions only upto 50% of the amount donated are :-

  • The National Defence Fund set up by the Central Government.
  • The Jawaharlal Nehru Memorial Fund.
  • The Prime Minister’s Drought Relief Fund.
  • The Indira Gandhi Memorial Trust.
  • The Rajiv Gandhi Foundation.
  • The National Sports Fund to be set up by the Central Government.
  • The National Cultural Fund.
  • The fund for Technology Development and Application set up by the Central Government.

Within the A and B categories, there are some funds, where there is a limit to the total contribution you can make. As a percentage of your gross total income, you can contribute only upto 10% in these funds. In the 100% category, the only fund which has this 10% limit is the donations for the purpose of promoting family planning. (Mentioned as 14 in the A category).

In the 50% category, the 10% limit is not applicable to any of the funds mentioned above. It is applicable, however, to contributions as donations for the renovation or repair of temples, mosques, gurudwaras, church or other places notified by the Central Government in the Official Gazette to be of historic, archeological or artistic importance, or to be a place of public worship of renown throughout any state.

Points To Remember

  • Definitely, this last category of contributions prove to be the least attractive in terms of tax rebate, as not only can you get only 50% tax rebate, you cannot contribute more than 10% of your gross total income to this fund.
  • The most attractive for tax rebates are A category funds ranging from serial number 1-13, which have a 100% tax rebate and have no limit on contributions. (Of course, the total contribution cannot exceed your gross total income)
  • The second most attractive are the B category funds (1-8) where there is no 10% limit on the total contribution.
  • The third most attractive are those options in which 100% deduction is allowed but there is a 10% limit on total contribution. (Category A-14)
  • In case you are rich and are in a position to donate lakhs of rupees to a charity, keep in mind one thing. To make a charity institution strong it needs to add to its own corpus. If you are a big donor, you can in most cases give instructions to the charity that the sum must be used only for the purpose of building the corpus of the charity institution. Any interest earned on it could be used for the purpose of the charitable activities of the organization.

In this way you are sure that you have helped not only in charity activities, but also reduced the charity’s dependence on outside funds.

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