80G Deduction in New Tax Regime for Companies & Employees

80G Deduction in New Tax Regime for Companies & Employees-feature image
May 15, 2024 Reviewed By : Akhilesh Nagpal .7 Min read

Summary: Did you know that you can claim the deduction for up to 50% or 100% of the donated amount based on the institution to which you have donated. Keep reading the article to find out how you can do it.

You always feel good when you help a cause or contribute to society with donations and charity. And, do you know what’s the best thing about it when you donate as a business or a professional? You get significant tax benefits!

For this nobility gesture, the government has also extended its support and offers tax deductions if you donate any amount. Section 80G of the Indian Income Tax Act supports tax deduction for contributions made to a specific relief fund or a charitable institution by any individual or business.

If you make donations, then you can easily claim tax deduction under the section 80G in addition to Section 80C and get the maximum tax benefits. Before we dive into more details, first, we will look at what exactly is Section 80G in Income Tax Act.

What is Section 80G in Income Tax?

Section 80G of the Income Tax Act is the provision that lets taxpayers claim deductions on several donations made to charitable institutions and funds. This section’s main purpose is to provide incentives to organizations or individuals involved in any type of social, cultural, philanthropy, and economic development activities.

Eligibility for Claiming Deduction Under 80G Tax Regime for Companies and Employees

These taxpayers are eligible to claim deductions under the 80G tax regime for companies, individuals, and employees:

  • Individuals
  • Companies
  • Firms
  • Hindu Undivided Firm (HUF)
  • Non-Resident Indian (NRI)
  • Any other person

However, not all the donations made are eligible for deduction within Section 80G. Only those deductions made to prescribed funds (described below) will be qualified as the deduction.

Note: This deduction can be claimed if an individual taxpayer chooses to pay taxes according to the new tax regime with certain restrictions and conditions (115BAC).

Payment Mode for 80G Deduction

You can claim Section 80G deductions as a taxpayer for all the donations you made by using the following modes.

  • Cheque
  • Demand draft
  • Cash (for donations below Rs 2,000)

Note: Contribution like food, clothes, materials, medicines, etc., and donations above 2K in cash are not qualified for deduction in Section 80G.

All donations specified within Section 80G are eligible for 100% or 50% deduction with or without restriction.

Suggested Read: New Tax Regime vs Old Tax Regime

List of Donations Eligible for Deduction Without Qualifying Limit (100%-50%)

Here is the list of donations that are eligible for deduction without qualifying limit.

1. Donations List Eligibility for 100% Deduction Without Qualifying Limit

Look at the donations lists that are eligible for 100% deductions without qualifying limit:

  • National Defence Fund Created by the Central Government
  • Prime Minister’s National Relief Fund
  • National Foundation for Communal Harmony
  • An Approved University or Educational Institution of National Eminence
  • Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
  • Fund Created by a state government for medical relief for poor people
  • National Illness Assistance Fund
  • National Blood Transfusion Council or any State Blood Transfusion Council
  • National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities
  • National Sports Fund
  • National Cultural Fund
  • Technology Development and Application Fund
  • National Children’s Fund
  • Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
  • The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
  • The Maharashtra Chief Minister’s Relief Fund during October 1, 1993, and October 6, 1993
  • Chief Minister’s Earthquake Relief Fund, Maharashtra
  • Any fund Created by the State Government of Gujarat for offering relief to the Gujrat earthquake’s victims
  • Any trust, institution and fund to which Section 80G(5C) applies for offering relief to the victims of the earthquake in Gujarat (contribution made between January 26, 2001, and September 30, 2001)
  • Prime Minister’s Armenia Earthquake Relief Fund
  • Africa (Public Contributions – India) Fund
  • Swachh Bharat Kosh (applicable from FY 2014-15)
  • Clean Ganga Fund (applicable from FY 2014-15)
  • National Fund for Control of Drug Abuse (applicable from FY 2015-16)

2. List of Donations Eligible for 50% Deduction Without Qualifying Limit

Here are some of the Funds and Trusts that are eligible for 50% deduction without qualifying limits:

  • Prime Minister’s Drought Relief Fund
  • Jawaharlal Nehru Memorial Fund
  • Indira Gandhi Memorial Trust
  • Rajiv Gandhi Foundation

Note: Donations made to the last three funds are not eligible for deduction from the Financial Year 2023-24 Onwards.

How to Claim for 80G Deduction

If you want to claim this deduction, you need to submit the following details within your income tax return form:

  • Donour’s name
  • Donour’s PAN number
  • Donour’s Address
  • Contribution Amount (Cash and Other Mode Breakup)
  • Deduction Eligibility Amount

These details need to be mentioned within the respective tables provided in the ITR.

  • Table A: For donations entitled to 100% deduction without qualifying limit
  • Table B: For donations entitled to 50% deduction without qualifying limit
  • Table C: For donations entitled to 100% deduction subject to qualifying limit
  • Table D: For donations entitled to a 50% deduction subject to the qualifying limit.

Benefits of 80G Deduction Claim for Companies and Employees

The tax benefit you will receive will depend on the applicable tax rate.

For example, Mr. X is a salaried employee and Ms. P owns PVT. LTD. Company. Both of them donated INR 1,60,000 to an NGO. Take the total income of each of them equals to INR 7,00,000. The tax benefit they will get is shown in the table below:

DetailsMr. X is an individualMs. P owns a PVT. LTD. Company
i) Income for the financial year 2023-247,00,0007,00,000
ii) Donation for the NGO1,60,0001,60,000
iii) Qualifying amount for deduction (50% of the donation made)80,00080,000
iv) Amount of deduction u/s 80G (gross qualifying amount subject to a maximum limit of 10% of the gross total income)50,00050,000
v) Taxable income after deduction6,20,0006,20,000
A. Tax payable after considering a donation
-Mr X tax calculation as per the income tax slab rate
-Ms. P. Pvt Ltd. tax calculated at 30%
B. Tax payable before donation52,5002,10,000
C. Tax Benefit from Section 80G deduction16,00024,000

Note: This computation has been done based on the tax slab rates applicable according to the old tax regime. This is because the taxpayer will only get the tax deduction benefit if he chooses to pay tax within the old tax regime.

Required Documentation to Claim Tax Deduction on Donations

Required Documentation to Claim Tax Deduction on Donations

If you want to claim the tax deduction within Section 80G, then you should submit the following documents to support your claim.

  • Duly Stamped Receipt: When you donate to any trust or charity, you must obtain a receipt for it. This receipt should include details like Name, Address, Trust PAN details, Amount Details, etc.
  • Trust Registration Number: All the eligible trusts that come under Section 80C are offered a registration number by the Income Tax Department. As the donor, you must ensure that the Trust receipt contains its registration number.

Key Takeaways of 80G Deductions

  • A duly stamped receipt and trust registration number is needed to claim tax deductions.
  • Donations are eligible for claim for 50% to 100% donation amount
  • Three payment modes are available to claim deduction like Cheque, Demand Draft, and Cash
  • People opting for new tax regime can claim deduction under the section 80G with some exceptions

Wrap Up

After reading this article, you might have got an idea about all the deductions you can claim under Section 80G. So, next time when you plan to donate to any Trust, do not hesitate as you can easily claim your deduction in accordance with Section 80G.

However, always check the deduction criteria before you start claiming your donation amount as per your taxable slab rates.

80G Deduction in New Tax Regime FAQs

  1. Is Section 80G allowed in the new tax regime?

    Yes, donations made to the eligible charitable trusts and funds are eligible for deductions within the new tax regime under Section 80G. However, these deductions are subject to particular conditions and limits.

  2. Which deduction is allowed in the new tax regime?

    Standard Deduction and deduction under section 80CCD (2) for employer's contribution to NPS are allowed in the new tax regime.

  3. Is political donation tax deductible in the new tax regime?

    Yes, political donation tax is deductible within the new tax regime. 100% donated amount to the political parties or electoral trusts are allowed as deductions within the Section 80GGC.

  4. What are the tax benefits of the new tax regime?

    Some of the tax benefits of the new tax regime include lower tax rate, simplified tax structure, increased rebate threshold, and so on.

Written by Varsha

Varsha is an experienced content writer at Techjockey. She has been writing since 2021 and has covered several industries in her writing like fashion, technology, automobile, interior design, etc. Over the span of 1 year, she has written 100+ blogs focusing on security, finance, accounts, inventory, human resources,... Read more

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