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Section 80G — Donations to charitable institutions

When you donate money to a charity or government fund, Section 80G lets you claim a deduction from your Gross Total Income — so you pay less tax. Think of it as the government sharing a portion of your donation burden. Every CA Inter student must understand this section because it tests both conceptual clarity and calculation skill.

The deduction is split into four categories based on two questions: (a) How much can you deduct — 100% or 50%? and (b) Is there a qualifying limit (a ceiling based on your income)?

Category A — 100% deduction, NO limit: Donations to funds like the National Defence Fund, PM's National Relief Fund (PMNRF), and PM CARES Fund qualify for full 100% deduction with no ceiling. ₹1,00,000 donated = ₹1,00,000 deducted.

Category B — 50% deduction, NO limit: Funds like the Jawaharlal Nehru Memorial Fund, PM's Drought Relief Fund, and National Children's Fund give you 50% deduction, still with no qualifying ceiling.

Category C — 100% deduction, WITH qualifying limit: Donations to approved institutions promoting family planning. The deduction is 100% but capped at 10% of Adjusted GTI.

Category D — 50% deduction, WITH qualifying limit: Donations to most registered charitable institutions, temples open to the public, etc. Deduction is 50% of the amount, but again, the eligible donation itself can't exceed 10% of Adjusted GTI.

The Adjusted GTI = GTI minus Long-Term Capital Gains, minus STCG u/s 111A, minus income under sections 115A/115D, minus all other Chapter VI-A deductions (except 80G itself).

One critical rule that trips up students: donations above ₹2,000 in cash are completely disallowed. Pay by cheque, demand draft, or online — always. Also, donations made to political parties or electoral trusts are covered under a separate section (80GGB/80GGC), not 80G.

For the exam, the most-tested scenario combines Categories B and D — a question will give you donations to two funds, one with a limit and one without, and ask you to compute total deduction. That's the formula you must master cold.

📊 Worked example

Example 1 — Mixed donation scenario (most exam-likely pattern)

Mr. Arjun Sharma (salaried individual) has the following details for PY 2024-25:

  • Gross Total Income: ₹10,00,000
  • Deductions under 80C already claimed: ₹1,50,000
  • Donation to PM's National Relief Fund (PMNRF): ₹80,000 (paid by cheque)
  • Donation to a registered local charitable trust (50% with qualifying limit): ₹1,20,000 (paid by cheque)

Step 1 — Compute Adjusted GTI:

Adjusted GTI = GTI − Chapter VI-A deductions except 80G

= ₹10,00,000 − ₹1,50,000 = ₹8,50,000

Step 2 — Qualifying limit (10% of Adjusted GTI):

= 10% × ₹8,50,000 = ₹85,000

Step 3 — Deduction for PMNRF (100%, no limit):

Full ₹80,000 is eligible.

Deduction = 100% × ₹80,000 = ₹80,000

Step 4 — Deduction for charitable trust (50%, with limit):

Eligible donation = lower of actual (₹1,20,000) and qualifying limit (₹85,000) = ₹85,000

Deduction = 50% × ₹85,000 = ₹42,500

Step 5 — Total 80G Deduction:

₹80,000 + ₹42,500 = ₹1,22,500

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Example 2 — Cash donation trap

Ms. Priya Iyer donates ₹5,000 cash + ₹25,000 by NEFT to an approved charitable trust (50%, with qualifying limit). Her Adjusted GTI is ₹6,00,000.

Qualifying limit = 10% × ₹6,00,000 = ₹60,000

Eligible donation = Only the NEFT portion = ₹25,000 (cash ₹5,000 is disallowed as it exceeds ₹2,000 threshold)

Actual eligible vs. qualifying limit: ₹25,000 < ₹60,000 → take ₹25,000

Deduction = 50% × ₹25,000 = ₹12,500

(Had she paid the full ₹30,000 online, deduction would have been 50% × ₹30,000 = ₹15,000)

⚠️ Common exam mistakes

  • Applying qualifying limit to PMNRF/NDFM donations. Students often apply the 10% qualifying limit to ALL 80G donations. Categories A and B (PMNRF, NDF, etc.) have NO qualifying ceiling — only Categories C and D are capped.
  • Forgetting to exclude 80G from Adjusted GTI computation. When calculating Adjusted GTI, subtract all Chapter VI-A deductions except 80G itself. Many students subtract 80G too, which understates the qualifying limit and reduces your deduction.
  • Allowing cash donations above ₹2,000. Any single cash donation exceeding ₹2,000 is fully disallowed — not partially. If ₹5,000 was paid in cash, the entire ₹5,000 is out, not just the excess ₹3,000.
  • Confusing 80G with 80GGA and 80GGB/80GGC. Section 80GGA covers donations for scientific research/rural development. Sections 80GGB/GGC cover political party donations. If the exam question says 'political party,' do NOT apply 80G.
  • Claiming 50% on a Category C fund. Some national funds (like PM's Drought Relief Fund) look important and students assume 100% — but they're Category B (50%). Memorise: only PMNRF, NDF, and PM CARES are unambiguously 100%. When in doubt, the exam question will specify the category.
📖 Bare Act text — Section 80G, Income Tax Act 1961 (click to expand)
(1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section,— (i) in a case where the aggregate of the sums specified in sub-section (2) includes any sum or sums of the nature specified in sub-clause (i) or in sub-clause (iiia) or in sub-clause (iiiaa) or in sub-clause (iiiab) or in sub-clause (iiib) or in sub-clause (iiie) or in sub-clause (iiif) or in sub-clause (iiig) or in sub-clause (iiiga) or sub-clause (iiih) or sub-clause (iiiha) or sub-clause (iiihb) or sub-clause (iiihc) or sub-clause (iiihd) or sub-clause (iiihe) or sub-clause (iiihf) or sub-clause (iiihg) or sub-clause (iiihh) or sub-clause (iiihi) or sub-clause (iiihj) or sub-clause (iiihk) or sub-clause (iiihl) or sub-clause (iiihm) or in sub-clause (vii) of clause (a) or in clause (c) or in clause (d) thereof, an amount equal to the whole of the sum or, as the case may be, sums of such nature plus fifty per cent of the balance of such aggregate; and (ii) in any other case, an amount equal to fifty per cent of the aggregate of the sums specified in sub-section (2). (2) The sums referred to in sub-section (1) shall be the following, namely:— (a) any sums paid by the assessee in the previous year as donations to— (i) the National Defence Fund set up by the Central Government; or (ii) the Jawaharlal Nehru Memorial Fund referred to in the Deed of Declaration of Trust adopted by the National Committee at its meeting held on the 17th day of August, 1964; or (iii) the Prime Minister's Drought Relief Fund; or (iiia) the Prime Minister's National Relief Fund; or (iiiaa) the Prime Minister's Armenia Earthquake Relief Fund; or (iiiab) the Africa (Public Contributions-India) Fund; or (iiib) the National Children's Fund; or (iiic) the Indira Gandhi Memorial Trust, the deed of declaration in respect whereof was registered at New Delhi on the 21st day of February, 1985; or
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