Filing ITR? Claim Deduction on Donations

This time of the year, taxpayers are busy with filing I-T Returns (ITR) and paying taxes, if any. Save your penny of your tax in a legit way. Because you must. The taxbuddy.com has often canvassed that you can save tax while filing ITR, even though you have not thoughtfully planned for that before the close of the financial year. The deductions of insurance, health insurance, provident funds, tuition fees and such others are popular modes of tax savings. The modes and eligibility conditions of claiming these deductions are discussed in detail in these articles. After the popular deductions are exhausted, one might search for whether she has made any charity donations in the last financial year. This is not uncommon since there are a lot of online forums pooling and raising resources for worthy charitable causes. And one may find it important to contribute one’s bit for such. In such cases, you may be eligible for tax deductions on the amount of donations. These deductions are not straightway available but come with certain conditions attached to them. Let’s see them.

Deductions are NOT available for:

  • Donations made in cash more are allowed only up to ₹2000/-. Do not donate in hard cash.
  • Donations in kind. If you donate clothes, articles, books, or anything like that, the deduction is not available
  • Donations to political parties – deduction on this can be claimed separately
  • Donations to foreign trusts – please check whether a trust is Indian or not

Quantum of deductions
The amount of deduction out of the donation amount is different depending upon the trust or institution you are donating to. The donation amount is the base amount on which the deduction amount is computed. On this, keep the following in mind:

  • The deduction on donations is not unlimited. It’s capped with upper limits in certain cases. Such an upper limit is 10% of the amount of adjusted gross total income (AGTI). The AGTI is computed by reducing the following items from Gross Total Income: (1) all tax-free incomes (2) income from long term capital gains (3) all deductions of 80C, 80D, 80CCD, 80TTA, etc. except that under 80G. Cases, where such upper cap is applicable, are tabulated below.
  • The deduction is available for 50% or 100% of the donation amounts depending upon the nature of activities or the institution as notified by the Central Government.

The table below gives names of various popular institutions/activities and eligible amount:

No upper cap With Upper Cap @10% of Adjusted GTI
100% 50% 100% 50%
National Defence Fund Jawaharlal Nehru Memorial Fund Donations to Government or Local Authority or approved Institution/Association for promoting Family Planning Any other charitable institution or trust or society carrying out pubic charitable activities
Prime Minister’s National Relief Fund
PM Cares Fund Prime Minister’s Drought Relief Fund  

For repairs or renovation of any notified temple, mosque, gurudwara, church, or other Historical places

National Foundation for Communal Harmony
An approved university/edu. Institution Indira Gandhi Memorial Trust Indian Olympic Association or any other sports association
National/State Blood Transfusion Council Rajiv Gandhi Foundation Housing Development Authority
National Sports Fund  
National Cultural Fund      

For promoting Minority community in India

National Children’s Fund    
Chief Minister’s Relief Fund    
Army Central Welfare Fund      
Swachha Bharat Kosh      
Clean Ganga Fund      
PM. Armenia Earthquake relief fund      
Zila Saksharta Samiti