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Section 80G - Donations and NGO Registration

Applicable: FY 2026-27 (AY 2027-28), India. Verify section numbers and limits against the Income Tax Act 2025, which replaces the 1961 Act from 1 April 2026.

Section 80G of the Income Tax Act, 1961 (Section 133 of the Income Tax Act 2025, see Deductions) lets a donor deduct eligible donations to approved charitable funds/institutions from total income. A deduction is not a rebate: it reduces taxable income, so the tax actually saved is only deduction x marginal rate.

For donors​

Deduction categories​

CategoryDeductionQualifying limit (10% of adjusted GTI)Examples
A100%No limitPM National Relief Fund, PM CARES Fund, National Defence Fund, National Children's Fund, Swachh Bharat Kosh, Clean Ganga Fund, National Foundation for Communal Harmony, National/State Blood Transfusion Council, a few specific state disaster-relief funds
B50%No limitPM Drought Relief Fund, Rajiv Gandhi Foundation, Indira Gandhi Memorial Trust, universities/educational institutions of national eminence
C100%Subject to limitGovernment / local authority for promoting family planning, Indian Olympic Association and notified sports-infrastructure or sponsorship bodies
D50%Subject to limitMost NGOs with an 80G certificate, Govt/local authority for charitable purposes (other than family planning), housing/town-planning authorities, government-notified religious institutions

Category D is what a typical registered NGO falls under: only 50% of the donation is deductible, and only up to 10% of adjusted gross total income.

Rules and conditions​

  • Old tax regime only. The new regime (Section 115BAC, Section 202 of the 2025 Act) disallows 80G.
  • Qualifying limit: 10% of adjusted gross total income = gross total income minus LTCG, STCG under 111A, LTCG under 112A, and deductions under Chapter VI-A (other than 80G), plus certain special-rate incomes.
  • Cash: donations above ₹2,000 in cash are not eligible. Pay by cheque, bank transfer, card or UPI.
  • Only money counts. Donations in kind (food, clothes, books, assets) are not eligible.
  • Receipt must show: NGO name and address, NGO PAN, 80G registration number and validity period, donor name/PAN, amount, mode of payment.
  • Donation to a trust/institution only. Gifts to individuals (even needy ones) never qualify.
  • Corpus donations to an approved institution are eligible like any other donation.
  • Companies' CSR spend is not deductible under 80G (the 2% CSR outflow is not an allowable expense); the implementing NGO needs CSR-1 registration.
  • Related sections: 80GGA (scientific research / rural development, 100%, not for donors with business income), 80GGC (political parties, 100%, not in cash).

100% options​

  • Without limit (Category A): the full donation is deductible with no cap, e.g. National Defence Fund, PMNRF, PM CARES, National Children's Fund, Swachh Bharat Kosh, Clean Ganga Fund.
  • With the 10% limit (Category C): 100% deduction, but the total is capped at 10% of adjusted GTI, e.g. family planning bodies and sports-infrastructure associations.
  • Outside 80G, Section 80GGA: 100% with no limit, but only if you have no business or profession income. Eligible recipients: scientific research associations (Section 35(1)(ii)), social science/statistical research institutions (35(1)(iii)), rural development programmes (35CCA) and projects under 35AC. Cash limit of ₹2,000 applies here too.
  • Check the certificate: the NGO's 80G certificate states which category it falls under. Ordinary NGOs are 50%, never 100%.
  • Chief Minister's / LG relief funds are not generally covered by 80G. Only specific notified state funds are, so confirm the fund appears in the Act or on the notified list before donating.
  • All of this applies only under the old regime.

Who can claim 80GGA​

  • Allowed for any assessee whose gross total income has no profits and gains of business or profession: salaried people, pensioners, rent/interest/dividend/capital-gains earners, and HUFs or companies with only investment income.
  • Excluded if GTI includes any business or professional income, even a small freelance or consulting income in that year.
  • Old regime only; cash above ₹2,000 is not allowed.
  • Why the split: business and professional earners get relief for the same spends (scientific research, rural development) as business deductions under the Section 35 family (35(1)(ii)/(iii), 35CCA, 35AC), while 80GGA gives equivalent relief to everyone else.
  • Business earners can also donate under regular 80G, and companies can route spend through CSR (CSR spend itself is not deductible).
  • Verify current Section 35 rates and the Income Tax Act 2025 numbering before relying on this.

Example: Akshaya Patra Foundation​

A typical 50% / Category D NGO. Online donors get an 80G certificate and receipt by email.

  • Donor PAN and an Indian address are required on the donation form, otherwise no certificate.
  • ₹500 minimum for a certificate is the foundation's own policy, not a legal rule.
  • Cash above ₹2,000 is not eligible; pay via UPI, card, cheque or bank transfer.
  • A lost certificate can be re-requested for the same FY from donorcare@akshayapatra.org.
  • Claiming via employer payroll: submit the receipt, copy of the 80G certificate, the trust's registration details, and an employer declaration that the donation was made from salary.

Worked example​

Income in the 30% slab (plus 4% cess = 31.2% effective), adjusted GTI of ₹20 lakh, donation of ₹1 lakh to a Category D NGO:

StepAmount
Donation₹1,00,000
Eligible amount (50%)₹50,000
Qualifying limit (10% of ₹20L)₹2,00,000, so no cap applies
Tax saved (₹50,000 x 31.2%)₹15,600
Net cost of donating₹84,400

Donating always leaves you poorer than not donating. The best case (Category A, 100%) still costs ~68.8 paise per rupee. 80G is a partial subsidy on giving, not a tax-saving scheme.

Surcharge changes the saving (₹1 lakh donation to a 50% NGO, 4% cess):

SlabTax saved
20%₹10,400
30%₹15,600
30% + 10% surcharge₹17,160
30% + 37% surcharge₹21,372

Simple AGTI illustration from the source: ₹10,00,000 gross income less ₹1,50,000 of other Chapter VI-A deductions gives AGTI of ₹8,50,000, so the 10% cap is ₹85,000 (it ignores the capital-gains exclusions above).

Claiming and verifying​

  • Claim in the ITR under Schedule 80G (split by category and by with/without limit); keep the receipts.
  • Since AY 2022-23 the NGO files Form 10BD (statement of donations) by 31 May after the FY and issues Form 10BE (donation certificate). The donation then shows in the donor's AIS / Form 26AS, so a donor without a matching entry may face a mismatch notice. Check that your PAN was captured.
  • Keep a stamped receipt showing the 80G number and PAN, proof of payment (and bank statement) for amounts above ₹2,000.
  • Before donating, verify the NGO's 12A/80G status and validity on the e-Filing portal's exempted-institutions list. Registration validity runs 5 years, so an expired certificate means no deduction.

For NGOs: getting 80G​

Prerequisites​

  • Legal form: public charitable Trust, Society, or Section 8 Company.
  • 12A registration (prior or simultaneous) - this is what gives the income exemption (Sections 11/12); 80G is a separate donor-side benefit.
  • Objects must not benefit a particular religious community or caste (80G(5)).
  • Not a private/family trust; the trust deed must not allow income to flow back to the founders.
  • Maintain regular books; any business income must be incidental to the objects and kept in separate books.
  • Darpan (NITI Aayog) ID is needed to receive government grants, not for 80G itself.

Process (since 1 April 2021)​

  1. Form 10A for a new entity: apply on the e-Filing portal for provisional 12A + 80G registration (valid 3 years, issued in Form 10AC with a unique registration number).
  2. Form 10AB for the regular registration (valid 5 years). File it at least 6 months before the provisional registration expires, or within 6 months of commencing activities, whichever is earlier. Also used for renewal every 5 years and for existing entities.
  3. The Commissioner of Income Tax (Exemption) may call for documents or clarifications and issues the order.
  4. Missing the Form 10AB window can lapse the registration, so put the date in a calendar.

Documents: trust deed / MoA / bye-laws, registration or incorporation certificate, NGO PAN, address proof (utility bill) with landlord NOC if rented, trustee/director list with PAN and contacts, 3 years of audited accounts (if running), and a note of activities.

Ongoing compliance​

  • Form 10BD / 10BE every year for donations received.
  • 85% rule: apply at least 85% of income to charitable objects in the year; up to 15% can be accumulated (Form 10 for longer accumulation, up to 5 years).
  • Audit (Form 10B / 10BB) if income exceeds the basic exemption limit before applying 11/12; file ITR-7.
  • Anonymous donations are taxed at 30% (Section 115BBC) except those to religious/charitable-with-religious trusts and certain limits.
  • FCRA registration is separate and mandatory for foreign contributions.
  • Consequences of violation: cancellation of 12A/80G, and the income becomes taxable at maximum marginal rate.

Can you create an NGO, fund it yourself and save tax?​

No - this is round-tripping and falls under the anti-abuse rules:

  • Section 13(1)(c)/(d), 13(3): any direct or indirect benefit to the founder, trustees, relatives or concerned persons (salary beyond reasonable, loans without adequate security, above-market rent, purchases from related entities, etc.) leads to loss of exemption.
  • The math defeats it anyway: 50% deduction, 10% cap, old regime only. Even if the money truly stayed in the NGO, you spent ₹1 to save ~15.6 paise.
  • The money stops being yours. It must be applied to the charitable objects; it cannot return to you or be a private account.
  • Founders can be paid reasonable remuneration for actual services, and genuinely run the NGO, but cannot treat it as a pocket.
  • Sham donations can trigger scrutiny, penalties, disallowance, and even prosecution for fraud.

References​

Disclaimer​

This content is for educational purposes only. Consult a qualified Chartered Accountant or tax professional for specific advice.